Amended in Senate June 13, 2016

Amended in Assembly April 14, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 1609

Introduced by Committee on Budget (Assembly Members Ting (Chair), Travis Allen, Bigelow, Bloom, Bonta, Campos, Chávez, Chiu, Cooper, Gordon, Grove, Harper, Holden, Irwin, Kim, Lackey, McCarty, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Patterson, Rodriguez, Thurmond, Wilk, and Williams)

January 7, 2016

begin delete An act relating to the Budget Act of 2016. end delete begin insert An act to amend Sections 27, 101, 144, 205.1, 19300, 19300.7, 19302, 19302.1, 19303, 19304, 19305, 19306, 19307, 19310, 19311, 19312, 19315, 19321, 19322, 19323, 19326, 19327, 19328, 19332, 19332.5, 19334, 19335, 19341, 19342, 19343, 19344, 19345, 19347, 19350, 19351, and 19360 of, to amend the heading of Chapter 3.5 (commencing with Section 19300) of Division 8 of, to amend and repeal Section 19320 of, to add Sections 19332.2, 19347.1, 19347.2, 19347.3, 19347.4, 19347.5, 19347.6, 19347.7, and 19347.8 to, to repeal Sections 19313 and 19318 of, to repeal Article 6 (commencing with Section 19331) of Chapter 3.5 of Division 8 of, and to repeal and add Section 19300.5 of, the Business and Professions Code, to amend Sections 2154, 2265, 5100, and 5151 of the Elections Code, to amend Sections 1602, 12025.2, and 12029 of, and to add Section 1617 to, the Fish and Game Code, to amend Section 52452 of, and to add Section 37104 to, the Food and Agricultural Code, to add Section 15283 to, and to add Chapter 6.45 (commencing with Section 30035) to Division 3 of Title 3 of, the Government Code, to amend Sections 11362.769, 11362.777, 44559.11, 50800.5, 51341, 51349, 51455, and 51622 of, to amend and renumber Sections 51344 and 51345 of, to amend and repeal Section 11362.775 of, to add Section 44559.14 to, to add Sections 50912.5 and 51511 to, to repeal Sections 51342, 51347, 51348, 51618, and 51619 of, and to add Chapter 19 (commencing with Section 50899.1) to Part 2 of Division 31 of, the Health and Safety Code, to amend Sections 12206, 17058, 18900.24, and 23610.5 of, to add and repeal Sections 17053.88.5 and 23688.5 of, and to repeal Section 31020 of, the Revenue and Taxation Code, and to amend Sections 1058.5, 1525, 1535, 1552, 1831, 1840, 1845, 1846, and 5103 of, and to add Sections 1847, 1848, and 13149 to, the Water Code, relating to state government, and making an appropriation therefor, to take effect immediately, bill related to the budget. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 1609, as amended, Committee on Budget. begin delete Budget Act of 2016. end delete begin insert State government. end insert

begin insert

(1) Existing law, the Medical Marijuana Regulation and Safety Act, regulates and licenses the cultivation, dispensing, distribution, manufacturing, testing, and transportation of medical cannabis through various state agencies, including, among others, the Bureau of Medical Marijuana Regulation, the Department of Food and Agriculture, and the State Department of Public Health, and authorizes the bureau to adopt rules to carry out the provisions of that act, as specified. That act requires a person to obtain both a local and state license to engage in commercial cannabis activities, except that the act authorizes, until January 1, 2018, a facility or entity that is operating in compliance with local laws to continue in operation until its application for licensure is approved or denied. That act requires the State Department of Public Health to regulate cannabis testing laboratories, as specified. That act authorizes the bureau to establish appellations of origin for marijuana grown in the state. That act establishes the Medical Marijuana Regulation Safety Act Fund and provides that moneys in the fund shall be available upon appropriation by the Legislature.

end insert begin insert

This bill would, among other things, change the name of the Medical Marijuana Regulation and Safety Act, the Bureau of Medical Marijuana Regulation, and the Medical Marijuana Regulation and Safety Act Fund to the Medical Cannabis Regulation and Safety Act, the Bureau of Medical Cannabis Regulation, and the Medical Cannabis Regulation and Safety Act Fund, and would change references to medical marijuana or marijuana to medical cannabis or cannabis, respectively. The bill would authorize licensing authorities, as defined, to adopt rules and regulations to carry out the purposes of that act and emergency regulations, as specified. The bill would add additional grounds for disciplinary action, including failure to maintain safe conditions for inspection by a licensing authority. The bill would exempt the premises or person from the above-mentioned requirement to obtain both a local and state license only if certain conditions are met, including that the applicant continues to operate in compliance with all local and state laws, except for possession of a state license. The bill would require the State Water Resources Control Board, in consultation with the Department of Fish and Wildlife, to adopt principles and guidelines for diversion and use of water for cannabis cultivation, as specified. The bill would require an applicant for a state license issued by a licensing authority to meet certain requirements, including providing proof of a bond to cover the costs of destruction of medical cannabis or medical cannabis products if necessitated by a violation of the licensing requirements. The bill would require an applicant for a license for indoor or outdoor cultivation to identify the source of water supply, as specified. The bill would authorize the Department of Food and Agriculture to establish appellations of origin for cannabis grown in the state instead of the bureau. The bill would require the bureau to regulate the laboratory testing of cannabis instead of the State Department of Public Health, as specified. The bill would authorize the State Department of Public Health to, among other things, develop standards for the manufacturing and labeling of all manufactured medical cannabis products and would require the State Department of Public Health, when it has evidence that a medical cannabis product is adulterated or misbranded, to notify the manufacturer, and authorizes the department to take certain actions.

end insert begin insert

(2) Existing law prohibits an entity from substantially diverting or obstructing the natural flow of, or substantially changing or using any material from the bed, channel, or bank of, any river, stream, or lake, or from depositing certain material where it may pass into any river, stream, or lake, without first notifying the Department of Fish and Wildlife of that activity, and entering into a lake or streambed alteration agreement if required by the department to protect fish and wildlife resources. Existing law exempts certain routine maintenance and operation activities from those requirements after the initial notification and agreement and exempts certain emergency activities from those notification and agreement requirements. Existing law authorizes the director of the department to establish a graduated schedule of fees to be charged to any entity subject to the notification and agreement provisions and requires any fees received to be deposited into the Fish and Game Preservation Fund. Under existing law, it is unlawful for any person to violate those notification and agreement provisions, and a person who violates them is also subject to a civil penalty of not more than $25,000 for each violation.

end insert begin insert

Existing law, in order to facilitate the remediation and permitting of marijuana cultivation sites, requires the department to adopt regulations to enhance the fees on any entity subject to lake or streambed alternation agreement provisions for marijuana cultivation sites that require remediation. Existing law prohibits this fee schedule from exceeding the fee limits established for lake or streambed alteration agreements.

end insert begin insert

This bill would exempt an entity from the requirement to enter into a lake or streambed alteration agreement with the department for activities authorized by a license or renewed license for cannabis cultivation issued by the Department of Food and Agriculture for the term of the license or renewed license if the entity submits the written notification to the department, a copy of the license or renewed license, and the fee required for a lake or streambed alteration agreement, and the department determines certain requirements are met. If an entity receives an exemption, any failure by the entity to comply with certain requirements contained in the license would constitute a violation of the lake or streambed alteration agreement provisions. Because this violation would be a crime, this bill would impose a state-mandated local program.

end insert begin insert

This bill would also authorize the department to adopt regulations establishing the requirements and procedure for the issuance of a general agreement in a geographic area for a category or categories of activities related to cannabis cultivation that would be in lieu of an individual lake or streambed alteration agreement.

end insert begin insert

(3) Existing law, with certain exceptions, requires each person who diverts water after December 31, 1965, to file with the State Water Resources Control Board a statement of diversion and use, and to include specified information, including the purpose of the use.

end insert begin insert

Existing law requires each person or entity who holds a permit or license to appropriate water, and certain lessors of water, to pay an annual fee according to a schedule established by the board. Existing law requires a person or entity who files a certain application, registration, petition, or request to pay a fee according to a schedule established by the board. Revenues generated from these fees are deposited into the Water Rights Fund, which are available, upon appropriation, for specified purposes.

end insert begin insert

This bill would require a statement of diversion and use to also include information regarding the amount of water used, if any, for cannabis cultivation. The bill would require a person who files a statement of diversion and use with the board reporting that water was used for cannabis cultivation to pay a fee according to a fee schedule established by the board. The bill would authorize moneys in the Water Rights Fund, upon appropriation, to be expended by the board for the purposes of carrying out water diversion-related provisions of the Medical Marijuana Regulation and Safety Act.

end insert begin insert

(4) Existing law authorizes the State Water Resources Control Board to issue a cease and desist order against a person who is violating, or threatening to violate, certain requirements relating to water use.

end insert begin insert

This bill would authorize the board to issue a cease and desist order against a person who is both diverting or using water for cannabis cultivation and violating, or threatening to violate, certain licensing and water diversion-related provisions of the Medical Marijuana Regulation and Safety Act.

end insert begin insert

(5) Under existing law, a person who violates a cease and desist order may be liable in an amount not to exceed $1,000 for each day in which the violation occurs and, for a violation occurring in a critically dry year immediately preceded by 2 or more consecutive below normal, dry, or critically dry years or during a period for which the Governor has issued a proclamation of a state of emergency based on drought conditions, may be liable in an amount not to exceed $10,000 for each day in which the violation occurs. Existing law authorizes a person or entity in violation of a term or condition of a permit, license, certificate, or registration issued by, an order adopted by, or regulations adopted by, the state board to be civilly liable for an amount not to exceed $500 for each day in which the violation occurs. Revenue generated from these penalties is deposited in the Water Rights Fund.

end insert begin insert

This bill would authorize a person or entity who violates certain licensing and water diversion-related provisions of the Medical Marijuana Regulation and Safety Act to be held liable in an amount not to exceed the sum of (1) $500 dollars for a violation plus $250 for each additional day on which the violation continues if the person fails to correct the violation within 30 days after the board has called the violation to the attention of the person and (2) $2,500 for each acre-foot of water diverted or used in violation of the applicable requirement. Revenue generated from these penalties would be deposited in the Water Rights Fund.

end insert begin insert

(6) Existing law requires a person who diverts 10 acre-feet of water per year or more under a permit or license to install and maintain a device or employ a method capable of measuring the rate of direct diversion, rate of collection to storage, and rate of withdrawal or release from storage, as specified, and with certain exceptions. Existing law requires the permittee or licensee to maintain a record of all diversion monitoring and the total amount of water diverted and submit these records to the state board, as prescribed. Existing law requires a person who diverts water under a registration, permit, or license to report to the state board, at least annually, certain information, including the monitoring information, if applicable.

end insert begin insert

This bill would require a person who diverts water under a registration, permit, or license to also report to the state board, at least annually, information regarding the amount of water used, if any, for cannabis cultivation.

end insert begin insert

(7) Existing law, the California Seed Law, regulates seed sold in California, and requires each container of agricultural seed that is for sale or sold within this state for sowing purposes to be labeled, as specified, unless the sale is an occasional sale of seed grain by the producer of the seed grain to his or her neighbor for use by the purchaser within the county of production.

end insert begin insert

This bill would also exclude from the California Seed Law any cannabis seed, as defined, sold or offered for sale in the state.

end insert begin insert

(8) Existing law, the Milk and Milk Products Act of 1947, regulates the production of milk and milk products in this state. The act specifies standards for butter. The act requires a license from the Secretary of Food and Agriculture for each separate milk products plant or place of business dealing in, receiving, manufacturing, freezing, or processing milk, or any milk product, or manufacturing, freezing, or processing imitation ice cream or imitation ice milk.

end insert begin insert

This bill would exempt from the Milk and Milk Products Act of 1947 butter purchased from a licensed milk products plant or retail location that is subsequently infused or mixed with medical cannabis at the premises or location that is not required to be licensed as a milk products plant.

end insert begin insert

(9) The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including, for taxable years beginning on or after January 1, 2012, and before January 1, 2017, a credit for a qualified taxpayer, defined as a person responsible for planting a crop, managing the crop, and harvesting the crop from the land, in an amount equal to 10% of the cost that would otherwise be included in, or required to be included in, inventory costs, as specified under federal law, with respect to the donation of fresh fruits or fresh vegetables to a food bank located in California.

end insert begin insert

This bill would establish similar credits under the Personal Income Tax Law and the Corporation Tax Law for taxable years beginning on or after January 1, 2017, and before January 1, 2022. The bill would, as compared to the existing credits, modify the credit amount to instead equal 15% of the qualified value, as defined, of the fresh fruits or vegetables. The bill would require the credit to be claimed on a timely filed original return.

end insert begin insert

(10) Existing law requires the Department of Housing and Community Development to administer the Emergency Housing and Assistance Program. Under the program, moneys from the continuously appropriated Emergency Housing and Assistance Fund are available for the purposes of providing shelter, as specified, to homeless persons.

end insert begin insert

This bill would create the California Emergency Solutions Grants Program, also to be administered by the department. The bill, among other things, would require the department to make grants under the program to qualifying subrecipients to implement activities that address the needs of homeless individuals and families and assist them to regain stability in permanent housing as quickly as possible, as specified. The bill, to the extent funds are made available by the Legislature, would authorize moneys in the Emergency Housing and Assistance Fund to be used for the purposes of the program.

end insert begin insert

(11) Existing law establishes a low-income housing tax credit program pursuant to which the California Tax Credit Allocation Committee provides procedures and requirements for the allocation of state insurance, income, and corporation tax credit amounts among low-income housing projects based on federal law.

end insert begin insert

This bill, beginning on or after January 1, 2016, and before January 1, 2020, would allow a taxpayer that is allowed a low-income housing tax credit to elect to sell all or a portion of that credit to one or more unrelated parties, as described, for each taxable year in which the credit is allowed for not less than 80% of the amount of the credit to be sold, and would provide for the one-time resale of that credit, as provided. The bill would require the California Tax Credit Allocation Committee to enter into an agreement with the Franchise Tax Board to pay any costs incurred by the Franchise Tax Board in administering these provisions.

end insert begin insert

Existing law, in the case of a partnership, requires the allocation of the credits, on or after January 1, 2009, and before January 1, 2016, to partners based upon the partnership agreement, regardless of how the federal low-income housing tax credit, as provided, is allocated to the partners, or whether the allocation of the credit under the terms of the agreement has substantial economic effect, as specified.

end insert begin insert

This bill would extend the January 1, 2016, date to January 1, 2020.

end insert begin insert

(12) The Public Safety Communications Act of 2013 (act) establishes the Public Safety Communications Division within the Office of Emergency Services and, among other things, requires the division to acquire, install, equip, maintain, and operate new or existing public safety communications systems and facilities for public safety agencies, as specified. Existing law also authorizes the division to aid local public agencies in the formulation of concepts, methods, and procedures that will improve the operation of nonemergency telephone systems, and requires the division to perform certain duties related to local emergency telephone systems.

end insert begin insert

This bill, beginning on July 1, 2016, would create the Public Safety Communications Revolving Fund in the State Treasury and require that the fund consist of, among others, revenues from the provision or sale of public safety communications services provided for in the act or of other services rendered by the division, and moneys appropriated and made available by the Legislature for the purposes of the act. The bill would require the Director of Emergency Services to administer the fund and would require the fund to be used, upon appropriation by the Legislature, to pay all costs to the office resulting from the act or from rendering services to the state or public agencies, and to establish reserves, as specified. The bill would require the reduction of the billing rates for services rendered by the office in a fiscal year if the balance in the fund at the end of the prior fiscal year meets certain conditions, and would require the Controller to transfer payments authorized to be collected by the division for the division’s services to the fund, as specified.

end insert begin insert

(13) Existing law establishes the Capital Access Loan Program to assist small businesses in financing the costs of complying with environmental mandates and the remediation of contamination on their properties, and also establishes within the program the California Americans with Disabilities Act Small Business Capital Access Loan Program to assist small businesses in financing the costs of projects that alter or retrofit existing small business facilities to comply with the federal Americans with Disabilities Act. Under existing law, both programs are administered by the California Pollution Control Financing Authority (authority).

end insert begin insert

This bill would establish within the Capital Access Loan Program the California Seismic Safety Capital Access Loan Program to assist residential property owners and small business owners in seismically retrofitting residences and small businesses by covering losses on qualified loans for those purposes, as specified. The bill would require the authority to administer the program, including regulations and funds received for the program, as specified. The bill would also authorize the authority to, by regulation, implement loan loss reserve programs to benefit any individual person engaged in qualifying activities that require financing, as specified.

end insert begin insert

This bill would establish the California Seismic Safety Capital Access Loan Program Fund and would continuously appropriate that fund to the authority to carry out the purposes of the California Seismic Safety Capital Access Loan Program.

end insert begin insert

(14) Existing law authorizes an individual to contribute amounts in excess of his or her income tax liability for the support of specified funds and allows an individual to designate on his or her tax return that a specified amount in excess of his or her tax liability be transferred to the Habitat for Humanity Fund. Existing law requires moneys in the fund, upon appropriation by the Legislature, to be allocated to the Franchise Tax Board, the Controller, and the Department of Housing and Community Development for reimbursement of costs, as provided, and the balance to the Department of Housing and Community Development to distribute grants to Habitat for Humanity affiliates in California that meet certain requirements, including having a specified tax-exempt status. Existing law requires the Department of Housing and Community Development to award grants through a competitive, project-specific grant process and be responsible for overseeing that grant program and prohibits a Habitat for Humanity affiliate from using a grant award for administrative expenses or for any purposes outside of California. Existing law also has administrative provisions applicable to voluntary contributions.

end insert begin insert

This bill would instead require the Department of Housing and Community Development to disburse these moneys to Habitat for Humanity of California, Inc., and would require that organization to submit a plan to the department for the use and competitive project-specific distribution of moneys to Habitat for Humanity affiliates in California that meet certain requirements, including having a specified tax-exempt status. The bill would allow Habitat for Humanity of California, Inc., to use a specified amount of moneys for administrative costs and would require the organization to submit an annual audit of the program to the department, as provided.

end insert begin insert

(15) Existing law establishes the California Housing Finance Agency with a primary purpose of meeting the housing needs of persons and families of low or moderate income. Under existing law, the California Housing Loan Insurance Fund, a continuously appropriated fund, is established for the purpose of insuring loans and bonds, and defraying administrative expenses incurred by the agency in operating these programs of loan and bond insurance, as specified. Existing law establishes within the agency a Director of Insurance of the fund who is required to manage and conduct the business and affairs of the insurance fund, as specified.

end insert begin insert

This bill would repeal provisions relating to the Director of Insurance of the fund. The bill would instead establish the director of enterprise risk management and compliance within the agency, who would be required to assist in the implementation of processes, tools, and systems to identify, assess, measure, manage, monitor, and mitigate risks related to the development of new programs or changes to existing law or regulations that may result in new or increased risk to the agency, as specified.

end insert begin insert

Existing law requires the agency to obtain an annual audit of the insurance fund’s books and accounts regarding its activities by an independent certified public accountant, to provide that audit to the Governor, the chairperson and vice-chairperson of the Senate and Assembly housing policy committees, the Senate and Assembly budget committees, and the Joint Legislative Budget Committee, and to make the audit available for review by interested parties no later than November 1 of each year.

end insert begin insert

This bill would instead require the agency to obtain an annual agreed-upon procedures engagement of the insurance fund’s books and accounts, to provide that agreed-upon procedures engagement to the to the Governor, the chairperson and vice-chairperson of the Senate and Assembly housing policy committees, the Senate and Assembly budget committees, and the Joint Legislative Budget Committee, and to make the agreed-upon procedures engagement available for review by interested parties no later than November 1 of each year.

end insert begin insert

By expanding the purposes of a continuously appropriated fund, this bill would make an appropriation.

end insert begin insert

(16) Existing law, known as the Second Chance Program, requires the Board of State and Community Corrections to administer a competitive grant program that focuses on community-based solutions for reducing recidivism using certain funds allocated pursuant to the Safe Neighborhoods and Schools Act, enacted by Proposition 47 at the November 4, 2014, general election.

end insert begin insert

This bill would establish the Community-Based Transitional Housing Program, to be administered by the Department of Finance, for the purpose of providing grants to cities, counties, and cities and counties to increase the supply of transitional housing available to persons previously incarcerated for felony and misdemeanor convictions and funded with moneys appropriated for that purpose in the annual Budget Act or other measure. The bill would require an applicant city, county, or city and county to submit an application between October 1, 2016, and October 1, 2018, that includes specified information and to approve the issuance of a conditional use permit or other local entitlement for a transitional housing facility that meets specified criteria, including that the facility provide transitional housing for a period of not less than 10 years and that it provide additional services to residents. If, after approval of its application, the city, county, or city and county fails to issue the conditional use permit or provide other local entitlement within a specified time period, the bill would provide that the approval of the application is void and the city, county, or city and county is permanently ineligible to submit any future application for funding under the program.

end insert begin insert

This bill would require the department to approve or deny an application based on specified criteria within 90 days of receipt and determine the amount of funds to award to the applicant city, county, or city and county. The bill would require that the department award up to $2,000,000 to each successful applicant and that 60% of the award be retained by the city, county, or city and county for certain law enforcement and community outreach purposes and 40% of the award be provided to the facility operator to provide services, enhance security, perform community outreach, or cover start-up costs.

end insert begin insert

The bill would require the department to submit a report to the Joint Legislative Budget Committee on November 1, 2017, and each November 1 thereafter until November 1, 2020, as provided. In addition, the bill would require the department’s Office of State Audits and Evaluations to conduct a review of the program to determine its effectiveness in providing services to offenders released from state prison or county jail. The bill would authorize the department to use up to $500,000 of the amount appropriated in any budget act or other measure for the program for this review.

end insert begin insert

The Administrative Procedure Act governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law. That act exempts from its provisions actions by the department to adopt and update, as necessary, instructions to any state or local agency for the preparation, development, or administration of the state budget.

end insert begin insert

This bill would provide that any action by the department to adopt and update instructions to any state or local agency for the purpose of carrying out the Community-Based Transitional Housing Program constitutes a department action to adopt and update instructions for the preparation, development, or administration of the state budget and is exempt from the Administrative Procedure Act.

end insert begin insert

(17) Existing law establishes within the Department of Housing and Community Development the California Housing Finance Agency and provides that the primary purpose of the agency is to meet the housing needs of persons and families of low or moderate income. Existing law requires the California Housing Finance Agency to administer various housing finance assistance programs, including, among others, the California Homebuyer’s Downpayment Assistance Program and the Homebuyer Down Payment Assistance Program of 2002.

end insert begin insert

This bill would discontinue those and other specified programs on and after July 1, 2016.

end insert begin insert

Existing law also requires the agency to administer the Roberti-Greene Home Purchase Assistance Program, which provides first-time homebuyers with home purchase assistance in the form of interest rate subsidies and downpayment assistance, among others. Existing law establishes the Home Purchase Assistance Fund in the State Treasury and continuously appropriates the fund to the agency for expenditure pursuant to the program and defraying actual administrative costs of the agency.

end insert begin insert

This bill, among other things, would modify the program to instead provide home purchase assistance to low- and moderate-income homebuyers to qualify for the purchase of owner-occupied homes and would revise the terms under which that assistance is provided. The bill would authorize the agency, pursuant to specified objectives, to create its own home purchase assistance programs, home purchase assistance products, or both, on such terms and conditions as the agency deems prudent. On and after July 1, 2016, the bill would transfer any obligated amounts from the funds for the programs discontinued by the bill, and any loan receivables, interest, or other amounts accruing to the agency pursuant to those programs, to the Home Purchase Assistance Fund. By expanding the authorized uses of continuously appropriated funds, this bill would make an appropriation.

end insert begin insert

(18) Existing law permits a person, at the time of registering to vote, to choose whether or not to disclose the name of a political party that he or she prefers on his or her affidavit of registration. When a county elections official receives an affidavit of registration that does not include a political party preference in the space provided, existing law requires the elections official to presume that the person has declined to disclose a party preference.

end insert begin insert

Existing law requires the Secretary of State to register a person to vote based on the person’s motor vehicle records, which constitute a completed affidavit of registration, as specified. If the person does not provide a political party preference in his or her motor vehicle records, existing law requires the person’s political party preference to be designated as “Unknown” and requires the person to be treated as a “No Party Preference” voter.

end insert begin insert

This bill would require a county elections official who receives an affidavit of registration that does not include a political party preference to designate the person’s political party preference as “Unknown” on a voter registration index and would require the person to otherwise be treated as a “No Party Preference” voter. This bill would specify that a voter whose political party preference is designated as “Unknown” because he or she did not provide a political party preference in his or her motor voter records is required to be designated as such on a voter registration index.

end insert begin insert

Existing law provides that a political party is qualified to participate in a primary election or presidential general election if voters equal in number to at least 0.33% of the total number of voters registered on a specified day before the election have declared their preference for that political party. For purposes determining whether a political party qualified to participate in the presidential general election, existing law prohibits a person who is registered to vote by the Secretary of State through his or her motor vehicle records, and whose party preference is designated as “Unknown” because he or she did not provide a party preference, from being counted in the total number of voters registered before the election.

end insert begin insert

This bill would prohibit counting a person in the total number of voters registered before the election for purposes of determining whether a political party qualified to participate in a primary election if that person is registered by a county elections official through an affidavit of registration, or by the Secretary of State through motor vehicle records, and his or her party preference is designated as “Unknown” because he or she did not include a party preference on his or her affidavit.

end insert begin insert

By imposing additional duties on the county elections officials, this bill would impose a state-mandated local program.

end insert begin insert

(19) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert begin insert

This bill would provide that with regard to certain mandates no reimbursement is required by this act for a specified reason.

end insert begin insert

With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

end insert begin insert

(12) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

end insert begin delete

This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2016.

end delete

Vote: majority. Appropriation:  begin delete no end delete begin insert yes end insert . Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 27 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

27.  

(a) Each entity specified in subdivisions (c), (d), and (e)
shall provide on the Internet information regarding the status of
every license issued by that entity in accordance with the California
Public Records Act (Chapter 3.5 (commencing with Section 6250)
of Division 7 of Title 1 of the Government Code) and the
Information Practices Act of 1977 (Chapter 1 (commencing with
Section 1798) of Title 1.8 of Part 4 of Division 3 of the Civil Code).
The public information to be provided on the Internet shall include
information on suspensions and revocations of licenses issued by
the entity and other related enforcement action, including
accusations filed pursuant to the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code) taken by the entity
relative to persons, businesses, or facilities subject to licensure or
regulation by the entity. The information may not include personal
information, including home telephone number, date of birth, or
social security number. Each entity shall disclose a licensee’s
address of record. However, each entity shall allow a licensee to
provide a post office box number or other alternate address, instead
of his or her home address, as the address of record. This section
shall not preclude an entity from also requiring a licensee, who
has provided a post office box number or other alternative mailing
address as his or her address of record, to provide a physical
business address or residence address only for the entity’s internal
administrative use and not for disclosure as the licensee’s address
of record or disclosure on the Internet.

(b) In providing information on the Internet, each entity specified
in subdivisions (c) and (d) shall comply with the Department of
Consumer Affairs’ guidelines for access to public records.

(c) Each of the following entities within the Department of
Consumer Affairs shall comply with the requirements of this
section:

(1) The Board for Professional Engineers, Land Surveyors, and
Geologists shall disclose information on its registrants and
licensees.

(2) The Bureau of Automotive Repair shall disclose information
on its licensees, including auto repair dealers, smog stations, lamp
and brake stations, smog check technicians, and smog inspection
certification stations.

(3) The Bureau of Electronic and Appliance Repair, Home
Furnishings, and Thermal Insulation shall disclose information on
its licensees and registrants, including major appliance repair
dealers, combination dealers (electronic and appliance), electronic
repair dealers, service contract sellers, and service contract
administrators.

(4) The Cemetery and Funeral Bureau shall disclose information
on its licensees, including cemetery brokers, cemetery salespersons,
cemetery managers, crematory managers, cemetery authorities,
crematories, cremated remains disposers, embalmers, funeral
establishments, and funeral directors.

(5) The Professional Fiduciaries Bureau shall disclose
information on its licensees.

(6) The Contractors’ State License Board shall disclose
information on its licensees and registrants in accordance with
Chapter 9 (commencing with Section 7000) of Division 3. In
addition to information related to licenses as specified in
subdivision (a), the board shall also disclose information provided
to the board by the Labor Commissioner pursuant to Section 98.9
of the Labor Code.

(7) The Bureau for Private Postsecondary Education shall
disclose information on private postsecondary institutions under
its jurisdiction, including disclosure of notices to comply issued
pursuant to Section 94935 of the Education Code.

(8) The California Board of Accountancy shall disclose
information on its licensees and registrants.

(9) The California Architects Board shall disclose information
on its licensees, including architects and landscape architects.

(10) The State Athletic Commission shall disclose information
on its licensees and registrants.

(11) The State Board of Barbering and Cosmetology shall
disclose information on its licensees.

(12) The State Board of Guide Dogs for the Blind shall disclose
information on its licensees and registrants.

(13) The Acupuncture Board shall disclose information on its
licensees.

(14) The Board of Behavioral Sciences shall disclose
information on its licensees, including licensed marriage and family
therapists, licensed clinical social workers, licensed educational
psychologists, and licensed professional clinical counselors.

(15) The Dental Board of California shall disclose information
on its licensees.

(16) The State Board of Optometry shall disclose information
regarding certificates of registration to practice optometry,
statements of licensure, optometric corporation registrations, branch
office licenses, and fictitious name permits of its licensees.

(17) The Board of Psychology shall disclose information on its
licensees, including psychologists, psychological assistants, and
registered psychologists.

(d) The State Board of Chiropractic Examiners shall disclose
information on its licensees.

(e) The Structural Pest Control Board shall disclose information
on its licensees, including applicators, field representatives, and
operators in the areas of fumigation, general pest and wood
destroying pests and organisms, and wood roof cleaning and
treatment.

(f) The Bureau of Medical begin delete Marijuana end delete begin insert Cannabis end insert Regulation shall
disclose information on its licensees.

(g) “Internet” for the purposes of this section has the meaning
set forth in paragraph (6) of subdivision (f) of Section 17538.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 101 of the end insert begin insert Business and Professions Code end insert begin insert is
amended to read: end insert

101.  

The department is comprised of the following:

(a) The Dental Board of California.

(b) The Medical Board of California.

(c) The State Board of Optometry.

(d) The California State Board of Pharmacy.

(e) The Veterinary Medical Board.

(f) The California Board of Accountancy.

(g) The California Architects Board.

(h) The Bureau of Barbering and Cosmetology.

(i) The Board for Professional Engineers and Land Surveyors.

(j) The Contractors’ State License Board.

(k) The Bureau for Private Postsecondary Education.

(l) The Bureau of Electronic and Appliance Repair, Home
Furnishings, and Thermal Insulation.

(m) The Board of Registered Nursing.

(n) The Board of Behavioral Sciences.

(o) The State Athletic Commission.

(p) The Cemetery and Funeral Bureau.

(q) The State Board of Guide Dogs for the Blind.

(r) The Bureau of Security and Investigative Services.

(s) The Court Reporters Board of California.

(t) The Board of Vocational Nursing and Psychiatric
Technicians.

(u) The Landscape Architects Technical Committee.

(v) The Division of Investigation.

(w) The Bureau of Automotive Repair.

(x) The Respiratory Care Board of California.

(y) The Acupuncture Board.

(z) The Board of Psychology.

(aa) The California Board of Podiatric Medicine.

(ab) The Physical Therapy Board of California.

(ac) The Arbitration Review Program.

(ad) The Physician Assistant Committee.

(ae) The Speech-Language Pathology and Audiology Board.

(af) The California Board of Occupational Therapy.

(ag) The Osteopathic Medical Board of California.

(ah) The Naturopathic Medicine Committee.

(ai) The Dental Hygiene Committee of California.

(aj) The Professional Fiduciaries Bureau.

(ak) The State Board of Chiropractic Examiners.

(al) The Bureau of Real Estate.

(am) The Bureau of Real Estate Appraisers.

(an) The Structural Pest Control Board.

(ao) The Bureau of Medical begin delete Marijuana end delete begin insert Cannabis end insert Regulation.

(ap) Any other boards, offices, or officers subject to its
jurisdiction by law.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 144 of the end insert begin insert Business and Professions Code end insert begin insert is
amended to read: end insert

144.  

(a) Notwithstanding any other begin delete provision of end delete law, an agency
designated in subdivision (b) shall require an applicant to furnish
to the agency a full set of fingerprints for purposes of conducting
criminal history record checks. Any agency designated in
subdivision (b) may obtain and receive, at its discretion, criminal
history information from the Department of Justice and the United
States Federal Bureau of Investigation.

(b) Subdivision (a) applies to the following:

(1) California Board of Accountancy.

(2) State Athletic Commission.

(3) Board of Behavioral Sciences.

(4) Court Reporters Board of California.

(5) State Board of Guide Dogs for the Blind.

(6) California State Board of Pharmacy.

(7) Board of Registered Nursing.

(8) Veterinary Medical Board.

(9) Board of Vocational Nursing and Psychiatric Technicians.

(10) Respiratory Care Board of California.

(11) Physical Therapy Board of California.

(12) Physician Assistant Committee of the Medical Board of
California.

(13) Speech-Language Pathology and Audiology and Hearing
Aid Dispenser Board.

(14) Medical Board of California.

(15) State Board of Optometry.

(16) Acupuncture Board.

(17) Cemetery and Funeral Bureau.

(18) Bureau of Security and Investigative Services.

(19) Division of Investigation.

(20) Board of Psychology.

(21) California Board of Occupational Therapy.

(22) Structural Pest Control Board.

(23) Contractors’ State License Board.

(24) Naturopathic Medicine Committee.

(25) Professional Fiduciaries Bureau.

(26) Board for Professional Engineers, Land Surveyors, and
Geologists.

(27) Bureau of Medical begin delete Marijuana end delete begin insert Cannabis end insert Regulation.

(c) For purposes of paragraph (26) of subdivision (b), the term
“applicant” shall be limited to an initial applicant who has never
been registered or licensed by the board or to an applicant for a
new licensure or registration category.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 205.1 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

205.1.  

Notwithstanding subdivision (a) of Section 205, the
Medical begin delete Marijuana end delete begin insert Cannabis end insert Regulation and Safety Act Fund is
a special fund within the Professions and Vocations Fund, and is
subject to subdivision (b) of Section 205.

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert The heading of Chapter 3.5 (commencing with Section
19300) of Division 8 of the end insert begin insert Business and Professions Code end insert begin insert is
amended to read: end insert

 

Chapter  3.5. Medical begin delete Marijuana end delete begin insert Cannabis end insert Regulation
and Safety act

 

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 19300 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19300.  

This act shall be known and may be cited as the Medical
begin delete Marijuana end delete begin insert Cannabis end insert Regulation and Safety Act.

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 19300.5 of the end insert begin insert Business and Professions Code end insert

begin insert is repealed. end insert

begin delete

19300.5.  

For purposes of this chapter, the following definitions
shall apply:

(a) “Accrediting body” means a nonprofit organization that
requires conformance to ISO/IEC 17025 requirements and is a
signatory to the International Laboratory Accreditation Cooperation
Mutual Recognition Arrangement for Testing.

(b) “Applicant,” for purposes of Article 4 (commencing with
Section 19319), means the following:

(1) Owner or owners of a proposed facility, including all persons
or entities having ownership interest other than a security interest,
lien, or encumbrance on property that will be used by the facility.

(2) If the owner is an entity, “owner” includes within the entity
each person participating in the direction, control, or management
of, or having a financial interest in, the proposed facility.

(3) If the applicant is a publicly traded company, “owner” means
the chief executive officer or any person or entity with an aggregate
ownership interest of 5 percent or more.

(c) “Batch” means a specific quantity of medical cannabis or
medical cannabis products that is intended to have uniform
character and quality, within specified limits, and is produced
according to a single manufacturing order during the same cycle
of manufacture.

(d) “Bureau” means the Bureau of Medical Marijuana
Regulation within the Department of Consumer Affairs.

(e) “Cannabinoid” or “phytocannabinoid” means a chemical
compound that is unique to and derived from cannabis.

(f) “Cannabis” means all parts of the plant Cannabis sativa
Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing
or not; the seeds thereof; the resin, whether crude or purified,
extracted from any part of the plant; and every compound,
manufacture, salt, derivative, mixture, or preparation of the plant,
its seeds, or resin. “Cannabis” also means the separated resin,
whether crude or purified, obtained from marijuana. “Cannabis”
also means marijuana as defined by Section 11018 of the Health
and Safety Code as enacted by Chapter 1407 of the Statutes of
1972. “Cannabis” does not include the mature stalks of the plant,
fiber produced from the stalks, oil or cake made from the seeds of
the plant, any other compound, manufacture, salt, derivative,
mixture, or preparation of the mature stalks (except the resin
extracted therefrom), fiber, oil, or cake, or the sterilized seed of
the plant which is incapable of germination. For the purpose of
this chapter, “cannabis” does not mean “industrial hemp” as defined
by Section 81000 of the Food and Agricultural Code or Section
11018.5 of the Health and Safety Code.

(g) “Cannabis concentrate” means manufactured cannabis that
has undergone a process to concentrate the cannabinoid active
ingredient, thereby increasing the product’s potency. An edible
medical cannabis product is not considered food, as defined by
Section 109935 of the Health and Safety Code, or a drug, as defined
by Section 109925 of the Health and Safety Code.

(h) “Caregiver” or “primary caregiver” has the same meaning
as that term is defined in Section 11362.7 of the Health and Safety
Code.

(i) “Certificate of accreditation” means a certificate issued by
an accrediting body to a licensed testing laboratory, entity, or site
to be registered in the state.

(j) “Chief” means Chief of the Bureau of Medical Marijuana
Regulation within the Department of Consumer Affairs.

(k) “Commercial cannabis activity” includes cultivation,
possession, manufacture, processing, storing, laboratory testing,
labeling, transporting, distribution, or sale of medical cannabis or
a medical cannabis product, except as set forth in Section 19319,
related to qualifying patients and primary caregivers.

(l) “Cultivation” means any activity involving the planting,
growing, harvesting, drying, curing, grading, or trimming of
cannabis.

(m) “Delivery” means the commercial transfer of medical
cannabis or medical cannabis products from a dispensary, up to
an amount determined by the bureau to a primary caregiver or
qualified patient as defined in Section 11362.7 of the Health and
Safety Code, or a testing laboratory. “Delivery” also includes the
use by a dispensary of any technology platform owned and
controlled by the dispensary, or independently licensed under this
chapter, that enables qualified patients or primary caregivers to
arrange for or facilitate the commercial transfer by a licensed
dispensary of medical cannabis or medical cannabis products.

(n) “Dispensary” means a facility where medical cannabis,
medical cannabis products, or devices for the use of medical
cannabis or medical cannabis products are offered, either
individually or in any combination, for retail sale, including an
establishment that delivers, pursuant to express authorization by
local ordinance, medical cannabis and medical cannabis products
as part of a retail sale.

(o) “Dispensing” means any activity involving the retail sale of
medical cannabis or medical cannabis products from a dispensary.

(p) “Distribution” means the procurement, sale, and transport
of medical cannabis and medical cannabis products between entities
licensed pursuant to this chapter.

(q) “Distributor” means a person licensed under this chapter to
engage in the business of purchasing medical cannabis from a
licensed cultivator, or medical cannabis products from a licensed
manufacturer, for sale to a licensed dispensary.

(r) “Dried flower” means all dead medical cannabis that has
been harvested, dried, cured, or otherwise processed, excluding
leaves and stems.

(s) “Edible cannabis product” means manufactured cannabis
that is intended to be used, in whole or in part, for human
consumption, including, but not limited to, chewing gum. An edible
medical cannabis product is not considered food as defined by
Section 109935 of the Health and Safety Code or a drug as defined
by Section 109925 of the Health and Safety Code.

(t) “Fund” means the Medical Marijuana Regulation and Safety
Act Fund established pursuant to Section 19351.

(u) “Identification program” means the universal identification
certificate program for commercial medical cannabis activity
authorized by this chapter.

(v) “Labor peace agreement” means an agreement between a
licensee and a bona fide labor organization that, at a minimum,
protects the state’s proprietary interests by prohibiting labor
organizations and members from engaging in picketing, work
stoppages, boycotts, and any other economic interference with the
applicant’s business. This agreement means that the applicant has
agreed not to disrupt efforts by the bona fide labor organization
to communicate with, and attempt to organize and represent, the
applicant’s employees. The agreement shall provide a bona fide
labor organization access at reasonable times to areas in which the
applicant’s employees work, for the purpose of meeting with
employees to discuss their right to representation, employment
rights under state law, and terms and conditions of employment.
This type of agreement shall not mandate a particular method of
election or certification of the bona fide labor organization.

(w) “Licensing authority” means the state agency responsible
for the issuance, renewal, or reinstatement of the license, or the
state agency authorized to take disciplinary action against the
license.

(x) “Cultivation site” means a facility where medical cannabis
is planted, grown, harvested, dried, cured, graded, or trimmed, or
that does all or any combination of those activities, that holds a
valid state license pursuant to this chapter, and that holds a valid
local license or permit.

(y) “Manufacturer” means a person that conducts the production,
preparation, propagation, or compounding of manufactured medical
cannabis, as described in subdivision (ae), or medical cannabis
products either directly or indirectly or by extraction methods, or
independently by means of chemical synthesis or by a combination
of extraction and chemical synthesis at a fixed location that
packages or repackages medical cannabis or medical cannabis
products or labels or relabels its container, that holds a valid state
license pursuant to this chapter, and that holds a valid local license
or permit.

(z) “Testing laboratory” means a facility, entity, or site in the
state that offers or performs tests of medical cannabis or medical
cannabis products and that is both of the following:

(1) Accredited by an accrediting body that is independent from
all other persons involved in the medical cannabis industry in the
state.

(2) Registered with the State Department of Public Health.

(aa) “Transporter” means a person issued a state license by the
bureau to transport medical cannabis or medical cannabis products
in an amount above a threshold determined by the bureau between
facilities that have been issued a state license pursuant to this
chapter.

(ab) “Licensee” means a person issued a state license under this
chapter to engage in commercial cannabis activity.

(ac) “Live plants” means living medical cannabis flowers and
plants, including seeds, immature plants, and vegetative stage
plants.

(ad) “Lot” means a batch, or a specifically identified portion of
a batch, having uniform character and quality within specified
limits. In the case of medical cannabis or a medical cannabis
product produced by a continuous process, “lot” means a
specifically identified amount produced in a unit of time or a
quantity in a manner that ensures its having uniform character and
quality within specified limits.

(ae) “Manufactured cannabis” means raw cannabis that has
undergone a process whereby the raw agricultural product has
been transformed into a concentrate, an edible product, or a topical
product.

(af) “Manufacturing site” means a location that produces,
prepares, propagates, or compounds manufactured medical
cannabis or medical cannabis products, directly or indirectly, by
extraction methods, independently by means of chemical synthesis,
or by a combination of extraction and chemical synthesis, and is
owned and operated by a licensee for these activities.

(ag) “Medical cannabis,” “medical cannabis product,” or
“cannabis product” means a product containing cannabis, including,
but not limited to, concentrates and extractions, intended to be sold
for use by medical cannabis patients in California pursuant to the
Compassionate Use Act of 1996 (Proposition 215), found at Section
11362.5 of the Health and Safety Code. For the purposes of this
chapter, “medical cannabis” does not include “industrial hemp”
as defined by Section 81000 of the Food and Agricultural Code
or Section 11018.5 of the Health and Safety Code.

(ah) “Nursery” means a licensee that produces only clones,
immature plants, seeds, and other agricultural products used
specifically for the planting, propagation, and cultivation of medical
cannabis.

(ai) “Permit,” “local license,” or “local permit” means an official
document granted by a local jurisdiction that specifically authorizes
a person to conduct commercial cannabis activity in the local
jurisdiction.

(aj) “Person” means an individual, firm, partnership, joint
venture, association, corporation, limited liability company, estate,
trust, business trust, receiver, syndicate, or any other group or
combination acting as a unit and includes the plural as well as the
singular number.

(ak) “State license,” “license,” or “registration” means a state
license issued pursuant to this chapter.

(al) “Topical cannabis” means a product intended for external
use. A topical cannabis product is not considered a drug as defined
by Section 109925 of the Health and Safety Code.

(am) “Transport” means the transfer of medical cannabis or
medical cannabis products from the permitted business location
of one licensee to the permitted business location of another
licensee, for the purposes of conducting commercial cannabis
activity authorized pursuant to this chapter.

end delete

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 19300.5 is added to the end insert begin insert Business and
Professions Code end insert begin insert , to read: end insert

begin insert

begin insert 19300.5. end insert   

For purposes of this chapter, the following definitions
shall apply:

(a) “Accrediting body” means a nonprofit organization that
requires conformance to ISO/IEC 17025 requirements and is a
signatory to the International Laboratory Accreditation
Cooperation Mutual Recognition Arrangement for Testing.

(b) “Applicant,” for purposes of Article 4 (commencing with
Section 19320), includes the following:

(1) Owner or owners of the proposed premises, including all
persons or entities having ownership interest other than a security
interest, lien, or encumbrance on property that will be used by the
premises.

(2) If the owner is an entity, “owner” includes within the entity
each person participating in the direction, control, or management
of, or having a financial interest in, the proposed premises.

(3) If the applicant is a publicly traded company, “owner”
means the chief executive officer or any person or entity with an
aggregate ownership interest of 5 percent or more.

(c) “Batch” means a specific quantity of homogeneous medical
cannabis or medical cannabis product and is one of the following
types:

(1) “Harvest batch” means a specifically identified quantity of
dried flower or trim, leaves, and other cannabis plant matter that
is uniform in strain, harvested at the same time, and, if applicable,
cultivated using the same pesticides and other agricultural
chemicals, and harvested at the same time.

(2) “Manufactured cannabis batch” means either:

(A) An amount of cannabis concentrate or extract produced in
one production cycle using the same extraction methods and
standard operating procedures, and is from the same harvest batch.

(B) An amount of a type of manufactured cannabis produced
in one production cycle using the same formulation and standard
operating procedures.

(d) “Bureau” means the Bureau of Medical Cannabis
Regulation within the Department of Consumer Affairs.

(e) “Cannabinoid” or “phytocannabinoid” means a chemical
compound that is unique to and derived from cannabis.

(f) “Cannabis” means all parts of the plant Cannabis sativa
Linnaeus, Cannabis indica, or Cannabis ruderalis, whether
growing or not; the seeds thereof; the resin, whether crude or
purified, extracted from any part of the plant; and every compound,
manufacture, salt, derivative, mixture, or preparation of the plant,
its seeds, or resin. “Cannabis” also means the separated resin,
whether crude or purified, obtained from cannabis. “Cannabis”
also means marijuana as defined by Section 11018 of the Health
and Safety Code as enacted by Chapter 1407 of the Statutes of
1972. “Cannabis” does not include the mature stalks of the plant,
fiber produced from the stalks, oil or cake made from the seeds of
the plant, any other compound, manufacture, salt, derivative,
mixture, or preparation of the mature stalks (except the resin
extracted therefrom), fiber, oil, or cake, or the sterilized seed of
the plant which is incapable of germination. For the purpose of
this chapter, “cannabis” does not mean “industrial hemp” as
defined by Section 81000 of the Food and Agricultural Code or
Section 11018.5 of the Health and Safety Code.

(g) “Cannabis concentrate” means manufactured cannabis that
has undergone a process to concentrate one or more active
cannabinoids, thereby increasing the product’s potency. Resin
from granular trichomes from a cannabis plant is a concentrate
for purposes of this chapter. A cannabis concentrate is not
considered food, as defined by Section 109935 of the Health and
Safety Code, or a drug, as defined by Section 109925 of the Health
and Safety Code.

(h) “Certificate of accreditation” means a certificate issued by
an accrediting body to a testing laboratory .

(i) “Chief” means Chief of the Bureau of Medical Cannabis
Regulation within the Department of Consumer Affairs.

(j) “Commercial cannabis activity” includes cultivation,
possession, manufacture, processing, storing, laboratory testing,
labeling, transporting, distribution, delivery, or sale of medical
cannabis or a medical cannabis product, except as set forth in
Section 19319, related to qualifying patients and primary
caregivers.

(k) “Cultivation” means any activity involving the planting,
growing, harvesting, drying, curing, grading, or trimming of
medical cannabis.

(l) “Cultivation site” means a location where medical cannabis
is planted, grown, harvested, dried, cured, graded, or trimmed, or
that does all or any combination of those activities.

(m) “Delivery” means the commercial transfer of medical
cannabis or medical cannabis products from a dispensary, up to
an amount determined by the bureau to a primary caregiver or
qualified patient as defined in Section 11362.7 of the Health and
Safety Code, or a testing laboratory. “Delivery” also includes the
use by a dispensary of any technology platform owned and
controlled by the dispensary, or independently licensed under this
chapter, that enables qualified patients or primary caregivers to
arrange for or facilitate the commercial transfer by a licensed
dispensary of medical cannabis or medical cannabis products.

(n) “Dispensary” means a premises where medical cannabis,
medical cannabis products, or devices for the use of medical
cannabis or medical cannabis products are offered, either
individually or in any combination, for retail sale, including an
establishment that delivers, pursuant to Section 19340, medical
cannabis and medical cannabis products as part of a retail sale.

(o) “Dispensing” means any activity involving the retail sale
of medical cannabis or medical cannabis products from a
dispensary.

(p) “Distribution” means the procurement, sale, and transport
of medical cannabis and medical cannabis products between
entities licensed pursuant to this chapter.

(q) “Distributor” means a person licensed under this chapter
to engage in the business of purchasing medical cannabis from a
licensed cultivator, or medical cannabis products from a licensed
manufacturer, for sale to a licensed dispensary.

(r) “Dried flower” means all dead medical cannabis that has
been harvested, dried, cured, or otherwise processed, excluding
leaves and stems.

(s) “Edible cannabis product” means manufactured cannabis
that is intended to be used, in whole or in part, for human
consumption, including, but not limited to, chewing gum, but
excluding products set forth in Division 15 (commencing with
Section 32501) of the Food and Agricultural Code. An edible
medical cannabis product is not considered food as defined by
Section 109935 of the Health and Safety Code or a drug as defined
by Section 109925 of the Health and Safety Code.

(t) “Fund” means the Medical Cannabis Regulation and Safety
Act Fund established pursuant to Section 19351.

(u) “Identification program” means the universal identification
certificate program for commercial medical cannabis activity
authorized by this chapter.

(v) “Labeling” means any label or other written, printed, or
graphic matter upon a medical cannabis product, or upon its
container or wrapper, or that accompanies any medical cannabis
product.

(w) “Labor peace agreement” means an agreement between a
licensee and a bona fide labor organization that, at a minimum,
protects the state’s proprietary interests by prohibiting labor
organizations and members from engaging in picketing, work
stoppages, boycotts, and any other economic interference with the
applicant’s business. This agreement means that the applicant has
agreed not to disrupt efforts by the bona fide labor organization
to communicate with, and attempt to organize and represent, the
applicant’s employees. The agreement shall provide a bona fide
labor organization access at reasonable times to areas in which
the applicant’s employees work, for the purpose of meeting with
employees to discuss their right to representation, employment
rights under state law, and terms and conditions of employment.
This type of agreement shall not mandate a particular method of
election or certification of the bona fide labor organization.

(x) “Local license, permit, or other authorization” means an
official document granted by a local jurisdiction that specifically
authorizes a person to conduct commercial cannabis activity in
the local jurisdiction.

(y) “Licensee” means a person issued a state license under this
chapter to engage in commercial cannabis activity.

(z) “Licensing authority” means the state agency responsible
for the issuance, renewal, or reinstatement of the license.

(aa) “Live plants” means living medical cannabis flowers and
plants, including seeds, immature plants, and vegetative stage
plants.

(ab) “Lot” means a batch or a specifically identified portion
of a batch.

(ac) “Manufactured cannabis” means raw cannabis that has
undergone a process whereby the raw agricultural product has
been transformed into a concentrate, an edible product, or a topical
product.

(ad) “Manufacturer” means a person that conducts the
production, preparation, propagation, or compounding of
manufactured medical cannabis, as described in subdivision (ae),
or medical cannabis products either directly or indirectly or by
extraction methods, or independently by means of chemical
synthesis or by a combination of extraction and chemical synthesis
at a fixed location that packages or repackages medical cannabis
or medical cannabis products or labels or relabels its container.

(ae) “Manufacturing site” means the premises that produces,
prepares, propagates, or compounds manufactured medical
cannabis or medical cannabis products, directly or indirectly, by
extraction methods, independently by means of chemical synthesis,
or by a combination of extraction and chemical synthesis, and is
owned and operated by a licensee for these activities.

(af) “Medical cannabis,” “medical cannabis product,” or
“cannabis product” means a product containing cannabis,
including, but not limited to, concentrates and extractions, intended
to be sold for use by medical cannabis patients in California
pursuant to the Compassionate Use Act of 1996 (Proposition 215),
found at Section 11362.5 of the Health and Safety Code. For the
purposes of this chapter, “medical cannabis” does not include
“industrial hemp” as defined by Section 81000 of the Food and
Agricultural Code or Section 11018.5 of the Health and Safety
Code.

(ag) “Nursery” means a licensee that produces only clones,
immature plants, seeds, and other agricultural products used
specifically for the planting, propagation, and cultivation of
medical cannabis.

(ah) “Person” means an individual, firm, partnership, joint
venture, association, corporation, limited liability company, estate,
trust, business trust, receiver, syndicate, or any other group or
combination acting as a unit and includes the plural as well as
the singular number.

(ai) “Primary caregiver” has the same meaning as that term
is defined in Section 11362.7 of the Health and Safety Code.

(aj) “State license” or “license ” means a state license issued
pursuant to this chapter.

(ak) “Testing laboratory” means the premises where tests are
performed on medical cannabis or medical cannabis products and
that holds a valid certificate of accreditation.

(al) “Topical cannabis” means a product intended for external
use. A topical cannabis product is not considered a drug as defined
by Section 109925 of the Health and Safety Code.

(am) “Transport” means the transfer of medical cannabis or
medical cannabis products from the permitted business location
of one licensee to the permitted business location of another
licensee, for the purposes of conducting commercial cannabis
activity authorized pursuant to this chapter.

(an) “Transporter” means a person who holds a license by the
bureau to transport medical cannabis or medical cannabis products
in an amount above a threshold determined by the bureau between
licensees that have been issued a license pursuant to this chapter.

end insert

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 19300.7 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19300.7.  

License classifications pursuant to this chapter are as
follows:

(a) Type 1 = Cultivation; Specialty outdoor; Small.

(b) Type 1A = Cultivation; Specialty indoor; Small.

(c) Type 1B = Cultivation; Specialty mixed-light; Small.

(d) Type 2 = Cultivation; Outdoor; Small.

(e) Type 2A = Cultivation; Indoor; Small.

(f) Type 2B = Cultivation; Mixed-light; Small.

(g) Type 3 = Cultivation; Outdoor; Medium.

(h) Type 3A = Cultivation; Indoor; Medium.

(i) Type 3B = Cultivation; Mixed-light; Medium.

(j) Type 4 = Cultivation; Nursery.

(k) Type 6 = Manufacturer 1.

(l) Type 7 = Manufacturer 2.

(m) Type 8 = begin delete Testing. end delete begin insert Testing laboratory. end insert

(n) Type 10 = Dispensary; General.

(o) Type 10A = begin insert Producing end insert Dispensary; No more than three
retail sites.

(p) Type 11 = begin delete Distribution. end delete begin insert Distributor. end insert

(q) Type 12 = Transporter.

begin insert

begin insert SEC. 10. end insert   

end insert

begin insert Section 19302 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19302.  

There is in the Department of Consumer Affairs the
Bureau of Medical begin delete Marijuana end delete begin insert Cannabis end insert Regulation, under the
supervision and control of the director. The director shall
administer and enforce the provisions of this begin delete chapter. end delete begin insert chapter
related to the bureau. end insert

begin insert

begin insert SEC. 11. end insert   

end insert

begin insert Section 19302.1 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19302.1.  

(a) The Governor shall appoint a chief of the bureau,
subject to confirmation by the Senate, at a salary to be fixed and
determined by the begin delete director end delete begin insert Director of Consumer Affairs end insert with the
approval of the Director of Finance. The chief shall serve under
the direction and supervision of the director and at the pleasure of
the Governor.

(b) Every power granted to or duty imposed upon the begin delete director end delete
begin insert Director of Consumer Affairs end insert under this chapter may be exercised
or performed in the name of the director by a deputy or assistant
director or by the chief, subject to conditions and limitations that
the director may prescribe. In addition to every power granted or
duty imposed with this chapter, the director shall have all other
powers and duties generally applicable in relation to bureaus that
are part of the Department of Consumer Affairs.

(c) The begin delete director end delete begin insert Director of Consumer Affairs end insert may employ and
appoint all employees necessary to properly administer the work
of the bureau, in accordance with civil service laws and regulations.

begin insert The Governor may also appoint a deputy chief and an assistant
chief counsel to the bureau. These positions shall hold office at
the pleasure of the Governor. end insert

(d) The Department of Consumer Affairs shall have the sole
authority to create, issue, renew, discipline, suspend, or revoke
licenses for the transportation, storage unrelated to manufacturing
activities, begin insert testing, end insert distribution, and sale of medical begin delete marijuana end delete
begin insert cannabis end insert within the state and to collect fees in connection with
activities the bureau regulates. The bureau begin delete may end delete begin insert shall have the
authority to end insert create licenses in addition to those identified in this
chapter that the bureau deems necessary to effectuate its duties
under this chapter.

(e) The Department of Food and Agriculture shall administer
the provisions of this chapter related to and associated with the
cultivation of medical begin delete cannabis. end delete begin insert cannabis and will serve as lead
agency for the purpose of fulfilling the requirements of the
California Environmental Quality Act (Division 13 (commencing
with Section 21000) of the Public Resources Code). end insert The
Department of Food and Agriculture shall have the authority to
create, issue, begin delete and suspend end delete begin insert renew, discipline, suspend, end insert or revoke
begin delete cultivation end delete licenses for begin delete violations of this chapter. The end delete begin insert the
cultivation of medical cannabis and to collect fees in connection
with activities it regulates. The Department of Food and
Agriculture shall have the authority to create licenses in addition
to those identified in this chapter that it deems necessary to
effectuate its duties under this chapter. end insert

begin insert (f) end insert begin insert   end insert begin insert The end insert State Department of Public Health shall administer the
provisions of this chapter related to and associated with the
manufacturing begin delete and testing end delete of medical cannabis. begin insert The State
Department of Public Health shall have the authority to create,
issue, renew, discipline, suspend, or revoke licenses for the
manufacturing of medical cannabis and medical cannabis products
and to collect fees in connection with activities it regulates. The
State Department of Public Health shall have the authority to
create licenses in addition to those identified in this chapter that
it deems necessary to effectuate its duties under this chapter. end insert

begin insert

begin insert SEC. 12. end insert   

end insert

begin insert Section 19303 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19303.  

Protection of the public shall be the highest priority for
begin delete the bureau end delete begin insert all licensing authorities end insert in exercising its licensing,
regulatory, and disciplinary functions under this chapter. Whenever
the protection of the public is inconsistent with other interests
sought to be promoted, the protection of the public shall be
paramount.

begin insert

begin insert SEC. 13. end insert   

end insert

begin insert Section 19304 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19304.  

begin insert (a) end insert begin insert   end insert The begin delete bureau end delete begin insert licensing authorities end insert shall make and
prescribe begin delete reasonable end delete rules begin insert and regulations end insert as may be necessary or
proper to carry out the purposes and intent of this chapter and to
enable begin delete it end delete begin insert each licensing authority end insert to exercise the powers and duties
conferred upon it by this chapter, not inconsistent with any statute
of this state, including particularly this chapter and Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code. For the performance of its duties, begin delete the
bureau end delete begin insert each licensing authority end insert has the power conferred by
Sections 11180 to 11191, inclusive, of the Government Code.

begin insert

(b) Each licensing authority may adopt emergency regulations
to implement this chapter.

end insert begin insert

(1) Each licensing authority may readopt any emergency
regulation authorized by this section that is the same as, or
substantially equivalent to, an emergency regulation previously
adopted by this section. Any such readoption shall be limited to
one time for each regulation.

end insert begin insert

(2) Notwithstanding any other law, the initial adoption of
emergency regulations and the readoption of emergency
regulations authorized by this section shall be deemed an
emergency and necessary for the immediate preservation of the
public peace, health, safety, or general welfare. The initial
emergency regulations and the readopted emergency regulations
authorized by this section shall be each submitted to the Office of
Administrative Law for filing with the Secretary of State and shall
remain in effect for no more than 180 days, by which time final
regulations may be adopted.

end insert

begin insert

begin insert SEC. 14. end insert   

end insert

begin insert Section 19305 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19305.  

Notice of any action of begin delete the end delete begin insert a end insert licensing authority required
by this chapter to be given may be signed and given by the director
begin insert of the licensing authority end insert or an authorized employee of the
begin delete department end delete begin insert licensing authority end insert and may be made personally or in
the manner prescribed by Section 1013 of the Code of Civil

begin delete Procedure. end delete begin insert Procedure, or in the manner prescribed by Section 124
of this code. end insert

begin insert

begin insert SEC. 15. end insert   

end insert

begin insert Section 19306 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19306.  

(a) The bureau may convene an advisory committee
to advise the bureau and licensing authorities on the development
of standards and regulations pursuant to this chapter, including
best practices and guidelines to ensure qualified patients have
adequate access to medical cannabis and medical cannabis
products. The advisory committee members shall be determined
by the chief.

(b) The advisory committee members may include, but not be
limited to, representatives of the medical begin delete marijuana end delete begin insert cannabis end insert
industry, representatives of medical begin delete marijuana end delete begin insert cannabis end insert cultivators,
appropriate local and state agencies, appropriate local and state
law enforcement, physicians, environmental and public health
experts, and medical begin delete marijuana end delete begin insert cannabis end insert patient advocates.

begin insert

begin insert SEC. 16. end insert   

end insert

begin insert Section 19307 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19307.  

A licensing authority may make or cause to be made
such investigation as it deems necessary to carry out its duties
under this chapter. begin insert A licensing authority may work with state and
local law enforcement agencies on investigations and enforcement
actions pertaining to licenses. end insert

begin insert

begin insert SEC. 17. end insert   

end insert

begin insert Section 19310 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19310.  

begin delete The department end delete begin insert A licensing authority end insert may on its own
motion at any time before a penalty assessment is placed into effect
and without any further proceedings, review the penalty, but such
review shall be limited to its reduction.

begin insert

begin insert SEC. 18. end insert   

end insert

begin insert Section 19311 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19311.  

Grounds for disciplinary action begin delete include: end delete begin insert include, but
are not limited to, the following: end insert

(a) Failure to comply with the provisions of this chapter or any
rule or regulation adopted pursuant to this chapter.

(b) Conduct that constitutes grounds for denial of licensure
pursuant to Chapter 3 (commencing with Section 490) of Division
1.5.

(c) Any other grounds contained in regulations adopted by a
licensing authority pursuant to this chapter.

(d) Failure to comply with any state law, except as provided for
in this chapter or other California law.

begin insert

(e) Failure to maintain safe conditions for inspection by a
licensing authority.

end insert begin insert

(f) Failure to comply with any operating procedure submitted
to the licensing authority pursuant to subdivision (b) of Section
19322.

end insert

begin insert

begin insert SEC. 19. end insert   

end insert

begin insert Section 19312 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19312.  

begin insert (a) end insert begin insert   end insert begin insert (1) end insert begin insert   end insert Each licensing authority may begin delete suspend or revoke
licenses, end delete begin insert suspend, revoke, place on probation with terms and
conditions, or otherwise discipline licenses issued by that licensing
authority and fine a licensee, end insert after proper notice and hearing to
the licensee, if the licensee is found to have committed any of the
acts or omissions constituting grounds for disciplinary action. begin delete The end delete

begin insert

(2) A licensing authority may revoke a license when a local
agency has notified the licensing authority that a licensee or
applicant within its jurisdiction is in violation of state rules and
regulation relating to commercial cannabis activities, and the
licensing authority, through an investigation, has determined that
the violation is grounds for termination or revocation of the license.

end insert

begin insert (b) end insert begin insert   end insert begin insert The end insert disciplinary proceedings under this chapter shall be
conducted in accordance with Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code,
and the director begin insert and agency head, as that term is defined in Section
11405.40 of the Government Code, end insert of each licensing authority
shall have all the powers granted therein.

begin insert

(c) Each licensing authority may take disciplinary action and
assess fines against its respective licensees for any violation of
this chapter when the violation was committed by the licensee’s
agent or employee while acting on behalf of the licensee or
engaged in commercial cannabis activity.

end insert begin insert

(d) A licensing authority may recover the costs of investigation
and enforcement of a disciplinary proceeding pursuant to Section
125.3 of this code.

end insert

begin insert

begin insert SEC. 20. end insert   

end insert

begin insert Section 19313 of the end insert begin insert Business and Professions Code end insert

begin insert is repealed. end insert

begin delete

19313.  

Each licensing authority may take disciplinary action
against a licensee for any violation of this chapter when the
violation was committed by the licensee’s agent or employee while
acting on behalf of the licensee or engaged in commercial cannabis
activity.

end delete

begin insert

begin insert SEC. 21. end insert   

end insert

begin insert Section 19315 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19315.  

(a) Nothing in this chapter shall be interpreted to
supersede or limit existing local authority for law enforcement
activity, enforcement of local zoning requirements or local
ordinances, or enforcement of begin delete local permit or licensing end delete begin insert local
license, permit, or other authorization end insert requirements.

(b) Nothing in this chapter shall be interpreted to require begin delete the
Department of Consumer Affairs end delete begin insert a licensing authority end insert to undertake
local law enforcement responsibilities, enforce local zoning
requirements, or enforce local begin delete licensing end delete begin insert licensing, permitting, or
other authorization end insert requirements.

(c) Nothing in this chapter shall be interpreted to supersede or
limit state agencies from exercising their existing enforcement
authority under the Fish and Game Code, the Water Code, the
Food and Agricultural Code, or the Health and Safety Code.

begin insert

begin insert SEC. 22. end insert   

end insert

begin insert Section 19318 of the end insert begin insert Business and Professions Code end insert

begin insert is repealed. end insert

begin delete

19318.  

(a) A person engaging in commercial cannabis activity
without a license required by this chapter shall be subject to civil
penalties of up to twice the amount of the license fee for each
violation, and the court may order the destruction of medical
cannabis associated with that violation in accordance with Section
11479 of the Health and Safety Code. Each day of operation shall
constitute a separate violation of this section. All civil penalties
imposed and collected pursuant to this section by a licensing
authority shall be deposited into the Medical Cannabis Fines and
Penalties Account established pursuant to Section 19351.

(b) If an action for civil penalties is brought against a licensee
pursuant to this chapter by the Attorney General on behalf of the
people, the penalty collected shall be deposited into the Medical
Cannabis Fines and Penalties Account established pursuant to
Section 19351. If the action is brought by a district attorney or
county counsel, the penalty collected shall be paid to the treasurer
of the county in which the judgment was entered. If the action is
brought by a city attorney or city prosecutor, the penalty collected
shall be paid to the treasurer of the city or city and county in which
the judgment was entered. If the action is brought by a city attorney
and is adjudicated in a superior court located in the unincorporated
area or another city in the same county, the penalty shall be paid
one-half to the treasurer of the city in which the complaining
attorney has jurisdiction and one-half to the treasurer of the county
in which the judgment is entered.

(c) Notwithstanding subdivision (a), criminal penalties shall
continue to apply to an unlicensed person engaging in commercial
cannabis activity in violation of this chapter, including, but not
limited to, those individuals covered under Section 11362.7 of the
Health and Safety Code.

end delete

begin insert

begin insert SEC. 23. end insert   

end insert

begin insert Section 19320 of the end insert begin insert Business and Professions Code end insert begin insert ,
as added by Section 4 of Chapter 689 of the Statutes of 2015, is
amended to read: end insert

19320.  

(a)  begin delete Licensing end delete begin insert All commercial cannabis activity shall
be conducted between licensees, except as otherwise provided in
this chapter. end insert

begin insert (b) end insert begin insert   end insert begin insert Licensing end insert authorities administering this chapter may issue
state licenses only to qualified applicants engaging in commercial
cannabis activity pursuant to this chapter. Upon the date of
implementation of regulations by the licensing authority, no person
shall engage in commercial cannabis activity without possessing
both a state license and a local permit, license, or other
authorization. A licensee shall not commence activity under the
authority of a state license until the applicant has obtained, in
addition to the state license, a begin delete license or permit end delete begin insert local license,
permit, or other authorization end insert from the local jurisdiction in which
he or she proposes to operate, following the requirements of the
applicable local ordinance.

begin delete

(b) Revocation of a local license, permit, or other authorization
shall terminate the ability of a medical cannabis business to operate
within that local jurisdiction until the local jurisdiction reinstates
or reissues the local license, permit, or other required authorization.
Local authorities shall notify the bureau upon revocation of a local
license. The bureau shall inform relevant licensing authorities.

end delete begin insert

(c) Each licensee shall obtain a separate license for each
location where it engages in commercial medical cannabis activity.
However, transporters only need to obtain licenses for each
physical location where the licensee conducts business while not
in transport or where any equipment that is not currently
transporting medical cannabis or medical cannabis products
permanently resides.

end insert begin insert

(d) Revocation of a local license, permit, or other authorization
shall terminate the ability of a medical cannabis business to
operate within that local jurisdiction until the local jurisdiction
reinstates or reissues the local license, permit, or other
authorization. Local authorities shall notify the bureau upon
revocation of a local license, permit, or other authorization. The
bureau shall inform relevant licensing authorities.

end insert begin delete

(c)

end delete

begin insert (e) end insert  Revocation of a state license shall terminate the ability of a
medical cannabis licensee to operate within California until the
licensing authority reinstates or reissues the state license. begin delete Each
licensee shall obtain a separate license for each location where it
engages in commercial medical cannabis activity. However,
transporters only need to obtain licenses for each physical location
where the licensee conducts business while not in transport, or any
equipment that is not currently transporting medical cannabis or
medical cannabis products, permanently resides. end delete

begin delete

(d)

end delete

begin insert (f) end insert  In addition to the provisions of this chapter, local jurisdictions
retain the power to assess fees and taxes, as applicable, on facilities
that are licensed pursuant to this chapter and the business activities
of those licensees.

begin delete

(e)

end delete

begin insert (g) end insert  Nothing in this chapter shall be construed to supersede or
limit state agencies, including the begin insert Department of Food and
Agriculture, the end insert State Water Resources Control begin delete Board end delete begin insert Board, end insert and
begin insert the end insert Department of Fish and Wildlife, from establishing fees to
support their medical cannabis regulatory programs.

begin insert

begin insert SEC. 24. end insert   

end insert

begin insert Section 19320 of the end insert begin insert Business and Professions Code end insert begin insert ,
as added by Section 8 of Chapter 719 of the Statutes of 2015, is
repealed. end insert

begin delete

19320.  

(a) Licensing authorities administering this chapter
may issue state licenses only to qualified applicants engaging in
commercial cannabis activity pursuant to this chapter. Upon the
date of implementation of regulations by the licensing authority,
no person shall engage in commercial cannabis activity without
possessing both a state license and a local permit, license, or other
authorization. A licensee shall not commence activity under the
authority of a state license until the applicant has obtained, in
addition to the state license, a license or permit from the local
jurisdiction in which he or she proposes to operate, following the
requirements of the applicable local ordinance.

(b) Revocation of a local license, permit, or other authorization
shall terminate the ability of a medical cannabis business to operate
within that local jurisdiction until the local jurisdiction reinstates
or reissues the local license, permit, or other required authorization.
Local authorities shall notify the bureau upon revocation of a local
license. The bureau shall inform relevant licensing authorities.

(c) Revocation of a state license shall terminate the ability of a
medical cannabis licensee to operate within California until the
licensing authority reinstates or reissues the state license. Each
licensee shall obtain a separate license for each location where it
engages in commercial medical cannabis activity. However,
transporters only need to obtain licenses for each physical location
where the licensee conducts business while not in transport, or any
equipment that is not currently transporting medical cannabis or
medical cannabis products, permanently resides.

(d) In addition to the provisions of this chapter, local
jurisdictions retain the power to assess fees and taxes, as applicable,
on facilities that are licensed pursuant to this chapter and the
business activities of those licensees.

(e) Nothing in this chapter shall be construed to supersede or
limit state agencies, including the State Water Resources Control
Board and Department of Fish and Wildlife, from establishing fees
to support their medical cannabis regulatory programs.

end delete

begin insert

begin insert SEC. 25. end insert   

end insert

begin insert Section 19321 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

begin delete

19321.  

(a) The Department of Consumer Affairs, the
Department of Food and Agriculture, and the State Department of
Public Health shall promulgate regulations for implementation of
their respective responsibilities in the administration of this chapter.

(b) 

end delete

begin insert

begin insert 19321. end insert   

end insert

begin insert (a) end insert begin insert   end insert A license issued pursuant to this begin delete section end delete begin insert chapter end insert
shall be valid for 12 months from the date of issuance. The license
shall be renewed annually. Each licensing authority shall establish
procedures for the renewal of a license.

begin delete

(c)

end delete

begin insert (b) end insert  Notwithstanding subdivision begin delete (a) end delete begin insert (b) end insert of Section 19320, begin delete a
facility or entity end delete begin insert the premises or person end insert that is operating in
compliance with local zoning ordinances and other state and local
requirements on or before January 1, 2018, may continue its
operations until its application for licensure is approved or denied
pursuant to this begin delete chapter. end delete begin insert chapter only if (1) a completed application
and all required documentation and approvals for licensure are
submitted to the licensing authority no later than the deadline
established by the licensing authority and (2) the applicant
continues to operate in compliance with all local and state
requirements, except possession of a state license pursuant to this
chapter. end insert In issuing licenses, the licensing authority shall prioritize
any begin delete facility or entity end delete begin insert premises or person end insert that can demonstrate to
the authority’s satisfaction that begin delete it end delete begin insert the premises or person end insert was in
operation and in good standing with the local jurisdiction by
January 1, 2016.

begin delete

(d)

end delete

begin insert (c) end insert  Issuance of a state license or a determination of compliance
with local law by the licensing authority shall in no way limit the
ability of the City of Los Angeles to prosecute any person or entity
for a violation of, or otherwise enforce, Proposition D, approved
by the voters of the City of Los Angeles on the May 21, 2013,
ballot for the city, or the city’s zoning laws. Nor may issuance of
a license or determination of compliance with local law by the
licensing authority be deemed to establish, or be relied upon, in
determining satisfaction with the immunity requirements of
Proposition D or local zoning law, in court or in any other context
or forum.

begin insert

begin insert SEC. 26. end insert   

end insert

begin insert Section 19322 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19322.  

(a) A person begin delete or entity end delete shall not submit an application
for a state license issued by begin delete the department end delete begin insert a licensing authority end insert
pursuant to this chapter unless that person begin delete or entity end delete has received
a license, permit, or authorization begin delete by a end delete begin insert from the end insert local jurisdiction.
An applicant for any type of state license issued pursuant to this
chapter shall do all of the following:

(1) Electronically submit to the Department of Justice fingerprint
images and related information required by the Department of
Justice for the purpose of obtaining information as to the existence
and content of a record of state or federal convictions and arrests,
and information as to the existence and content of a record of state
or federal convictions and arrests for which the Department of
Justice establishes that the person is free on bail or on his or her
own recognizance, pending trial or appeal.

(A) The Department of Justice shall provide a response to the
licensing authority pursuant to paragraph (1) of subdivision (p) of
Section 11105 of the Penal Code.

(B) The licensing authority shall request from the Department
of Justice subsequent notification service, as provided pursuant to
Section 11105.2 of the Penal Code, for applicants.

(C) The Department of Justice shall charge the applicant a fee
sufficient to cover the reasonable cost of processing the requests
described in this paragraph.

(2) Provide documentation issued by the local jurisdiction in
which the proposed business is operating certifying that the
applicant is or will be in compliance with all local ordinances and
regulations.

(3) Provide evidence of the legal right to occupy and use the
proposed location. For an applicant seeking a cultivator, distributor,
manufacturing, begin insert testing, transporter, end insert or dispensary license, provide
a statement from the owner of real property or their agent where
the cultivation, distribution, manufacturing, begin insert testing, transport, end insert or
dispensing begin insert of end insert commercial medical cannabis activities will occur,
as proof to demonstrate the landowner has acknowledged and
consented to permit cultivation, distribution, manufacturing, begin insert testing,
transport, end insert or dispensary activities to be conducted on the property
by the tenant applicant.

(4) If the application is for a cultivator or a dispensary, provide
evidence that the proposed location is located beyond at least a
600-foot radius from a school, as required by Section 11362.768
of the Health and Safety Code.

(5) Provide a statement, signed by the applicant under penalty
of perjury, that the information provided is complete, true, and
accurate.

(6) (A) For an applicant with 20 or more employees, provide
a statement that the applicant will enter into, or demonstrate that
it has already entered into, and abide by the terms of a labor peace
agreement.

(B) For the purposes of this paragraph, “employee” does not
include a supervisor.

(C) For purposes of this paragraph, “supervisor” means an
individual having authority, in the interest of the licensee, to hire,
transfer, suspend, lay off, recall, promote, discharge, assign,
reward, or discipline other employees, or responsibility to direct
them or to adjust their grievances, or effectively to recommend
such action, if, in connection with the foregoing, the exercise of
that authority is not of a merely routine or clerical nature, but
requires the use of independent judgment.

(7) Provide the applicant’s begin insert valid end insert seller’s permit number issued
pursuant to Part 1 (commencing with Section 6001) of Division 2
of the Revenue and Taxation Code or indicate that the applicant
is currently applying for a seller’s permit.

(8) Provide any other information required by the licensing
authority.

(9) For an applicant seeking a cultivation license, provide a
statement declaring the applicant is an “agricultural employer,” as
defined in the Alatorre-Zenovich-Dunlap-Berman Agricultural
Labor Relations Act of 1975 (Part 3.5 (commencing with Section
1140) of Division 2 of the Labor Code), to the extent not prohibited
by law.

begin delete

(10) For an applicant seeking licensure as a testing laboratory,
register with the State Department of Public Health and provide
any information required by the State Department of Public Health.

(11)

end delete

begin insert (10) end insert  Pay all applicable fees required for licensure by the
licensing authority.

begin insert

(11) Provide proof of a bond to cover the costs of destruction
of medical cannabis or medical cannabis products if necessitated
by a violation of licensing requirements.

end insert

(b) For applicants seeking licensure to cultivate, distribute, begin delete or
manufacture end delete begin insert manufacture, test, or dispense end insert medical begin delete cannabis, end delete
begin insert cannabis or medical cannabis products, end insert the application shall also
include a detailed description of the applicant’s operating
procedures for all of the following, as required by the licensing
authority:

(1) Cultivation.

(2) Extraction and infusion methods.

(3) The transportation process.

(4) Inventory procedures.

(5) Quality control procedures.

begin insert

(6) Security protocols.

end insert

begin insert

begin insert SEC. 27. end insert   

end insert

begin insert Section 19323 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19323.  

(a)  begin delete The end delete begin insert A end insert licensing authority shall deny an application
if begin delete either end delete the applicant or the premises for which a state license is
applied begin delete do end delete begin insert does end insert not qualify for licensure under this begin delete chapter. end delete begin insert chapter
or the rules and regulations for the state license. end insert

(b)  begin delete The end delete begin insert A end insert licensing authority may deny begin delete the end delete begin insert an end insert application for
licensure or renewal of a state begin delete license end delete begin insert license, or issue a conditional
license, end insert if any of the following conditions apply:

(1) Failure to comply with the provisions of this chapter or any
rule or regulation adopted pursuant to this chapter, including but
not limited to, any requirement imposed to protect natural
resources, instream flow, and water quality pursuant to subdivision
(a) of Section 19332.

(2) Conduct that constitutes grounds for denial of licensure
pursuant to Chapter 2 (commencing with Section 480) of Division
1.5.

begin delete

(3) A local agency has notified the licensing authority that a
licensee or applicant within its jurisdiction is in violation of state
rules and regulation relating to commercial cannabis activities,
and the licensing authority, through an investigation, has
determined that the violation is grounds for termination or
revocation of the license. The licensing authority shall have the
authority to collect reasonable costs, as determined by the licensing
authority, for investigation from the licensee or applicant.

end delete begin delete

(4)

end delete

begin insert (3) end insert  The applicant has failed to provide information required by
the licensing authority.

begin delete

(5)

end delete

begin insert (4) end insert  The applicant or licensee has been convicted of an offense
that is substantially related to the qualifications, functions, or duties
of the business or profession for which the application is made,
except that if the licensing authority determines that the applicant
or licensee is otherwise suitable to be issued a license and granting
the license would not compromise public safety, the licensing
authority shall conduct a thorough review of the nature of the
crime, conviction, circumstances, and evidence of rehabilitation
of the applicant, and shall evaluate the suitability of the applicant
or licensee to be issued a license based on the evidence found
through the review. In determining which offenses are substantially
related to the qualifications, functions, or duties of the business or
profession for which the application is made, the licensing authority
shall include, but not be limited to, the following:

(A) A felony conviction for the illegal possession for sale, sale,
manufacture, transportation, or cultivation of a controlled
substance.

(B) A violent felony conviction, as specified in subdivision (c)
of Section 667.5 of the Penal Code.

(C) A serious felony conviction, as specified in subdivision (c)
of Section 1192.7 of the Penal Code.

(D) A felony conviction involving fraud, deceit, or
embezzlement.

begin delete

(6)

end delete

begin insert (5) end insert  The applicant, or any of its officers, directors, or owners, is
a licensed physician making patient recommendations for medical
cannabis pursuant to Section 11362.7 of the Health and Safety
Code.

begin delete

(7)

end delete

begin insert (6) end insert  The applicant or any of its officers, directors, or owners has
been subject to fines or penalties for cultivation or production of
a controlled substance on public or private lands pursuant to
Section 12025 or 12025.1 of the Fish and Game Code.

begin delete

(8)

end delete

begin insert (7) end insert  The applicant, or any of its officers, directors, or owners,
has been sanctioned by a licensing authority or a city, county, or
city and county for unlicensed commercial begin delete medical end delete cannabis
activities or has had a license revoked under this chapter in the
three years immediately preceding the date the application is filed
with the licensing authority.

begin delete

(9)

end delete

begin insert (8) end insert  Failure to obtain and maintain a valid seller’s permit required
pursuant to Part 1 (commencing with Section 6001) of Division 2
of the Revenue and Taxation Code.

begin insert

(9) The applicant or any of its officers, directors, owners,
employees, or authorized agents have failed to comply with any
operating procedure required pursuant to subdivision (b) of Section
19322.

end insert begin insert

(10) Conduct that constitutes grounds for disciplinary action
pursuant to this chapter.

end insert

begin insert

begin insert SEC. 28. end insert   

end insert

begin insert Section 19326 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19326.  

(a) A person other than a begin delete licensed end delete transporter shall not
transport medical cannabis or medical cannabis products from one
licensee to another licensee, unless otherwise specified in this
chapter.

(b)  begin insert (1) end insert begin insert   end insert All begin delete licensees holding cultivation or manufacturing
licenses end delete begin insert cultivators, manufacturers, and licensees holding a
producing dispensary license in addition to a cultivation or
manufacturing license end insert shall send all medical cannabis and medical
cannabis products cultivated or manufactured to a distributor, as
defined in Section 19300.5, for begin insert presale end insert quality assurance and
inspection by begin delete the Type 11 licensee end delete begin insert a distributor end insert and for a batch
testing by a begin delete Type 8 licensee end delete begin insert testing laboratory end insert prior to distribution
to a dispensary. begin delete Those licensees holding a Type 10A license in
addition to a cultivation license or a manufacturing license shall
send all medical cannabis and medical cannabis products to a Type
11 licensee for presale inspection and for a batch testing by a Type
8 licensee prior to dispensing any product. The licensing authority
shall fine a licensee who violates this subdivision in an amount
determined by the licensing authority to be reasonable. end delete

begin insert

(2) Notwithstanding paragraph (1), a cultivator shall not be
required to send medical cannabis to a distributor if the medical
cannabis is to be used, sold, or otherwise distributed by methods
approved pursuant to this chapter by a manufacturer for further
manufacturing.

end insert

(c) (1) Upon receipt of medical cannabis or medical cannabis
products begin delete by a holder of a cultivation or manufacturing license, end delete
begin insert from a cultivator, manufacturer, or a licensee holding a producing
dispensary license in addition to a cultivation or a manufacturing
license, end insert the begin delete Type 11 licensee end delete begin insert distributor end insert shall first inspect the
product to ensure the identity and quantity of the product and begin delete then end delete
ensure a random sample of the medical cannabis or medical
cannabis product is tested by a begin delete Type 8 licensee prior to distributing
the batch of medical cannabis or medical cannabis products. end delete begin insert testing
laboratory. end insert

(2) Upon issuance of a certificate of analysis by the begin delete Type 8
licensee end delete begin insert testing laboratory end insert that the product is fit for begin delete manufacturing
or retail, all end delete begin insert dispensing end insert medical cannabis and medical cannabis
products shall undergo a quality assurance review by the begin delete Type 11
licensee end delete begin insert distributor end insert prior to distribution to ensure the quantity and
content of the medical cannabis or medical cannabis product, and
for tracking and taxation purposes by the state. begin delete and manufacturers
shall package or seal all medical cannabis and medical cannabis
products in tamper-evident packaging and use a unique identifier,
as prescribed by the Department of Food and Agriculture, for the
purpose of identifying and tracking medical cannabis or medical
cannabis products. Medical cannabis and medical cannabis products
shall be labeled as required by Section 19347. All packaging and
sealing shall be completed prior to medical cannabis or medical
cannabis products being transported or delivered to a licensee,
qualified patient, or caregiver. end delete

(3) This section does not limit the ability of licensed cultivators,
manufacturers, and dispensaries to directly enter into contracts
with one another indicating the price and quantity of medical
cannabis or medical cannabis products to be distributed. However,
a begin delete Type 11 licensee end delete begin insert distributor end insert responsible for executing the
contract is authorized to collect a fee for the services rendered,
including, but not limited to, costs incurred by a begin delete Type 8 licensee, end delete
begin insert testing laboratory, end insert as well as applicable state or local taxes and
fees.

(d) Medical cannabis and medical cannabis products shall be
tested by a begin delete registered end delete begin insert licensed end insert testing laboratory, prior to begin delete retail
sale or dispensing, as follows: end delete begin insert dispensing, pursuant to Section
19344. end insert

begin delete

(1) Medical cannabis from dried flower shall, at a minimum,
be tested for concentration, pesticides, mold, and other
contaminants.

end delete begin delete

(2) Medical cannabis extracts shall, at a minimum, be tested for
concentration and purity of the product.

end delete begin delete

(3)

end delete

begin insert (e) end insert  This chapter shall not prohibit a licensee from performing
begin delete on-site end delete testing begin insert on the licensee’s premises end insert for the purposes of quality
assurance of the product in conjunction with reasonable business
operations. On-site testing by the licensee shall not be certified by
the begin delete State Department of Public Health. end delete begin insert Bureau of Medical
Cannabis Regulation. end insert

begin delete

(e) All commercial cannabis activity shall be conducted between
licensees, when these are available.

end delete

begin insert

begin insert SEC. 29. end insert   

end insert

begin insert Section 19327 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19327.  

(a) A licensee shall keep accurate records of
commercial cannabis activity.

(b) All records related to commercial cannabis activity begin delete as
defined by the licensing authorities end delete shall be maintained for a
minimum of seven years.

(c)  begin delete The bureau end delete begin insert Licensing authorities end insert may examine the begin delete books
and end delete records of begin delete a licensee end delete begin insert licensees end insert and inspect the premises of a
licensee as the licensing authority or a state or local agency deems
necessary to perform its duties under this chapter. All inspections
begin insert and examination of records end insert shall be conducted during standard
business hours of the licensed facility or at any other reasonable
time. begin insert Licensees shall provide and deliver records to the licensing
authority upon request. end insert

(d) Licensees shall keep records identified by the licensing
authorities on the premises of the location licensed. begin delete The licensing
authorities may make any examination of the records of any
licensee. Licensees shall also provide and deliver copies of
documents to the licensing agency upon request. end delete

(e) A licensee or its agent, or employee, that refuses, impedes,
obstructs, or interferes with an inspection of the premises or records
of the licensee pursuant to this section has engaged in a violation
of this chapter.

(f) If a begin delete licensee end delete begin insert licensee, its agent, end insert or an employee of a licensee
fails to maintain or provide the records required pursuant to this
section, the licensee begin delete shall end delete begin insert may end insert be subject to a citation and fine of
thirty thousand dollars ($30,000) per individual violation.

begin insert

begin insert SEC. 30. end insert   

end insert

begin insert Section 19328 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19328.  

(a)  begin delete A end delete begin insert Except as provided in paragraphs (9) and (10),
a end insert licensee may only hold a state license in up to two separate
license categories, as follows:

(1) Type 1, 1A, 1B, 2, 2A, or 2B licensees may also hold either
a Type 6 or 7 state license.

(2) Type 6 or 7 licensees, or a combination thereof, may also
hold either a Type 1, 1A, 1B, 2, 2A, or 2B state license.

(3) Type 6 or 7 licensees, or a combination thereof, may also
hold a Type 10A state license.

(4) Type 10A licensees may also hold either a Type 6 or 7 state
license, or a combination thereof.

(5) Type 1, 1A, 1B, 2, 2A, or 2B licensees, or a combination
thereof, may also hold a Type 10A state license.

(6) Type 10A licensees may begin delete apply for end delete begin insert hold a end insert Type 1, 1A, 1B,
2, 2A, or 2B state license, or a combination thereof.

(7) Type 11 licensees shall begin delete apply for end delete begin insert also hold end insert a Type 12 state
license, but shall not begin delete apply for end delete begin insert hold end insert any other type of state license.

(8) Type 12 licensees may begin delete apply for end delete begin insert hold end insert a Type 11 state license.

(9) A Type 10A licensee may begin delete apply for end delete begin insert hold end insert a Type 6 or 7 state
license and begin insert may also end insert hold a 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B, 4 or
combination thereof if, under the 1, 1A, 1B, 2, 2A, 2B, 3, 3A, 3B,
4 or combination of licenses thereof, no more than four acres of
total canopy size of cultivation by the licensee is occurring
throughout the state during the period that the respective licenses
are valid. All cultivation pursuant to this section shall comply with
local ordinances. This paragraph shall become inoperative on
January 1, 2026.

begin insert

(10) All cultivators and manufacturers may hold a Type 12
transporter license. All cultivators and manufacturers who are
issued Type 12 transporter licenses shall comply with the
following:

end insert begin insert

(A) Cultivators shall only transport medical cannabis from a
cultivation site to a manufacturer or a distributor.

end insert begin insert

(B) Manufacturers shall only transport medical cannabis and
medical cannabis products as follows:

end insert begin insert

(i) Between a cultivation site and a manufacturing site.

end insert begin insert

(ii) Between a manufacturing site and a manufacturing site.

end insert begin insert

(iii) Between a manufacturing site and a distributor.

end insert

(b) Except as provided in subdivision (a), a person or entity that
holds a state license is prohibited from licensure for any other
activity authorized under this chapter, and is prohibited from
holding an ownership interest in real property, personal property,
or other assets associated with or used in any other license category.

(c) (1) In a jurisdiction that adopted a local ordinance, prior to
July 1, 2015, begin delete allowing or end delete requiring qualified businesses to cultivate,
manufacture, and dispense medical cannabis or medical cannabis
products, with all commercial cannabis activity being conducted
by a single qualified business, upon licensure that business shall
not be subject to subdivision (a) if it meets all of the following
conditions:

(A) The business was cultivating, manufacturing, and dispensing
medical cannabis or medical cannabis products on begin delete July 1, 2015, end delete
begin insert January 1, 2016, end insert and has continuously done so since that date.

(B) The business has been in full compliance with all applicable
local ordinances at all times prior to licensure.

(C) The business is registered with the State Board of

begin delete Equalization. end delete begin insert Equalization for tax purposes. end insert

(2) A business licensed pursuant to paragraph (1) is not required
to conduct all cultivation or manufacturing within the bounds of
a local jurisdiction, but all cultivation and manufacturing shall
have commenced prior to begin delete July 1, 2015, end delete begin insert January 1, 2016, end insert and have
been in full compliance with applicable local ordinances.

(d) This section shall remain in effect only until January 1, 2026,
and as of that date is repealed.

begin insert

begin insert SEC. 31. end insert   

end insert

begin insert Article 6 (commencing with Section 19331) of Chapter
3.5 of Division 8 of the end insert begin insert Business and Professions Code end insert begin insert , as added
by Section 1 of Chapter 688 of the Statutes of 2015, is repealed. end insert

begin insert

begin insert SEC. 32. end insert   

end insert

begin insert Section 19332 of the end insert begin insert Business and Professions Code end insert begin insert ,
as added by Section 13 of Chapter 719 of the Statutes of 2015, is
amended to read: end insert

19332.  

(a) The Department of Food and Agriculture shall
promulgate regulations governing the licensing of indoor and
outdoor begin insert commercial end insert cultivation sites.

(b) The Department of Pesticide begin delete Regulation, in consultation
with the Department of Food and Agriculture, end delete begin insert Regulation end insert shall
develop begin delete standards end delete begin insert guidelines end insert for the use of pesticides in begin delete cultivation,
and maximum tolerances for pesticides and other foreign object end delete
begin insert the cultivation of cannabis and end insert residue in harvested cannabis.

begin delete

(c) The State Department of Public Health shall develop
standards for the production and labeling of all edible medical
cannabis products.

end delete begin delete

(d)

end delete

begin insert (c) end insert  The Department of Food and begin delete Agriculture, in end delete begin insert Agriculture
shall serve as the lead agency for purposes of the California
Environmental Quality Act (Division 13 (commencing with Section
21000) of the Public Resources Code) related to the licensing of
cannabis cultivation. end insert

begin insert (d) end insert begin insert   end insert begin insert Pursuant to Section 13149 of the Water Code, the State
Water Resources Control Board, in end insert consultation with the
Department of Fish and Wildlife and the begin delete State Water Resources
Control Board, end delete begin insert Department of Food and Agriculture, end insert shall ensure
that individual and cumulative effects of water diversion and
discharge associated with cultivation begin insert of cannabis end insert do not affect the
instream flows needed for fish spawning, migration, and rearing,
and the flows needed to maintain natural flow variability.

(e) The Department of Food and Agriculture shall have the
authority necessary for the implementation of the regulations it
adopts pursuant to this chapter. The regulations shall do all of the
following:

(1) Provide that weighing or measuring devices used in
connection with the sale or distribution of medical cannabis are
required to meet standards equivalent to Division 5 (commencing
with Section 12001).

(2) Require that cannabis cultivation by licensees is conducted
in accordance with state and local begin delete laws related to land conversion,
grading, electricity usage, water usage, agricultural discharges,
and similar matters. end delete begin insert laws. end insert Nothing in this chapter, and no regulation
adopted by the department, shall be construed to supersede or limit
the authority of the State Water Resources Control Board, regional
water quality control boards, or the Department of Fish and
Wildlife to implement and enforce their statutory obligations or
to adopt regulations to protect water quality, water supply, and
natural resources.

(3) Establish procedures for the issuance and revocation of
unique identifiers for activities associated with a cannabis
cultivation license, pursuant to Article 8 (commencing with Section
19337). All cannabis shall be labeled with the unique identifier
issued by the Department of Food and Agriculture.

(4) Prescribe standards, in consultation with the bureau, for the
reporting of information as necessary related to unique identifiers,
pursuant to Article 8 (commencing with Section 19337).

(f) The Department of Pesticide begin delete Regulation, in consultation with
the State Water Resources Control Board, end delete begin insert Regulation end insert shall
begin delete promulgate regulations that end delete require that the application of pesticides
or other pest control in connection with the indoor or outdoor
cultivation of medical cannabis begin delete meets standards equivalent to end delete
begin insert complies with end insert Division 6 (commencing with Section 11401) of
the Food and Agricultural Code and its implementing regulations.

(g) State cultivator license types issued by the Department of
Food and Agriculture begin insert may end insert include:

(1) Type 1, or “specialty outdoor,” for outdoor cultivation using
no artificial lighting of less than or equal to 5,000 square feet of
total canopy size on one premises, or up to 50 mature plants on
noncontiguous plots.

(2) Type 1A, or “specialty indoor,” for indoor cultivation using
exclusively artificial lighting of less than or equal to 5,000 square
feet of total canopy size on one premises.

(3) Type 1B, or “specialty mixed-light,” for cultivation using a
combination of natural and supplemental artificial lighting at a
maximum threshold to be determined by the licensing authority,
of less than or equal to 5,000 square feet of total canopy size on
one premises.

(4) Type 2, or “small outdoor,” for outdoor cultivation using
no artificial lighting between 5,001 and 10,000 square feet,
inclusive, of total canopy size on one premises.

(5) Type 2A, or “small indoor,” for indoor cultivation using
exclusively artificial lighting between 5,001 and 10,000 square
feet, inclusive, of total canopy size on one premises.

(6) Type 2B, or “small mixed-light,” for cultivation using a
combination of natural and supplemental artificial lighting at a
maximum threshold to be determined by the licensing authority,
between 5,001 and 10,000 square feet, inclusive, of total canopy
size on one premises.

(7) Type 3, or “outdoor,” for outdoor cultivation using no
artificial lighting from 10,001 square feet to one acre, inclusive,
of total canopy size on one premises. The Department of Food and
Agriculture shall limit the number of licenses allowed of this type.

(8) Type 3A, or “indoor,” for indoor cultivation using
exclusively artificial lighting between 10,001 and 22,000 square
feet, inclusive, of total canopy size on one premises. The
Department of Food and Agriculture shall limit the number of
licenses allowed of this type.

(9) Type 3B, or “mixed-light,” for cultivation using a
combination of natural and supplemental artificial lighting at a
maximum threshold to be determined by the licensing authority,
between 10,001 and 22,000 square feet, inclusive, of total canopy
size on one premises. The Department of Food and Agriculture
shall limit the number of licenses allowed of this type.

(10) Type 4, or “nursery,” for cultivation of medical cannabis
solely as a nursery. Type 4 licensees may transport live begin delete plants. end delete

begin insert plants, if the licensee also holds a Type 12 transporter license
issued pursuant to this chapter. end insert

begin insert

begin insert SEC. 33. end insert   

end insert

begin insert Section 19332.2 is added to the end insert begin insert Business and
Professions Code end insert begin insert , to read: end insert

begin insert

begin insert 19332.2. end insert   

(a) An application for a license for indoor or outdoor
cultivation shall identify the source of water supply.

(1) (A) If water will be supplied by a retail water supplier, as
defined in Section 13575 of the Water Code, the application shall
identify the retail water supplier.

(B) Paragraphs (2) and (3) shall not apply to any water subject
to subparagraph (A) unless the retail water supplier has 10 or
fewer customers, the applicant receives 10 percent or more of the
water supplied by the retail water supplier, 25 percent or more of
the water delivered by the retail water supplier is used for cannabis
cultivation, or the applicant and the retail water supplier are
affiliates, as defined in Section 2814.20 of Title 23 of the California
Code of Regulations.

(2) If the water supply includes a diversion within the meaning
of Section 5100 of the Water Code, the application shall identify
the point of diversion and maximum amount to be diverted.

(3) If water will be supplied from a groundwater extraction not
subject to paragraph (2), the application shall identify the location
of the extraction and the maximum amount to be diverted for
cannabis cultivation in any year.

(b) An application for a license issued by the Department of
Food and Agriculture before January 1, 2020, shall include one
of the following:

(1) A copy of a registration, permit, or license issued under Part
2 (commencing with Section 1200) of Division 2 of the Water Code
that covers the diversion.

(2) A copy of a statement of water diversion and use, filed with
the State Water Resources Control Board before July 1, 2017, that
covers the diversion and specifies the amount of water used for
cannabis cultivation.

(3) A copy of a pending application for a permit to appropriate
water, filed with the State Water Resources Control before July
1, 2017.

(4) Documentation, submitted to the State Water Resources
Control Board before July 1, 2017, establishing that the diversion
is subject to subdivision (a), (c), (d) or (e) of Section 5101 of the
Water Code.

(5) Documentation, submitted to the State Water Resources
Control Board before July 1, 2017, establishing that the diversion
is authorized under a riparian right and that no diversion occurred
after January 1, 2010, and before January 1, 2017.

(c) An application for a cultivation license issued after
December 31, 2019, shall include one of the following:

(1) A copy of a registration, permit, or license issued under Part
2 (commencing with Section 1200) of Division 2 of the Water Code
that covers the diversion.

(2) A copy of a statement of water diversion and use, filed with
the State Water Resources Control Board, that covers the diversion.

(3) Documentation, submitted to the State Water Resources
Control Board, establishing that the diversion is subject to
subdivision (a), (c), (d) or (e) of Section 5101 of the Water Code.

(4) Documentation, submitted to the State Water Resources
Control Board, establishing that the diversion is authorized under
a riparian right and that no diversion occurred in any calendar
year between January 1, 2010, and the calendar year in which the
application is submitted.

(d) The Department of Food and Agriculture shall include in
any license for cultivation requirements for compliance with
applicable principles, guidelines, and requirements established
under Section 13149 of the Water Code.

(e) The Department of Food and Agriculture shall include in
any license for cultivation any relevant mitigation requirements
the Department of Food and Agriculture identifies as part of its
approval of the final environmental documentation for the cannabis
cultivation licensing program as requirements that should be
included in a license for cultivation. Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code does not apply to the identification of these
mitigation measures.

(f) Every license for cultivation shall include a condition that
the license shall not be effective until the licensee has complied
with Section 1602 of the Fish and Game Code or receives written
verification from the Department of Fish and Wildlife that a
streambed alteration agreement is not required.

(g) The Department of Food and Agriculture shall consult with
the State Water Resources Control Board and the Department of
Fish and Wildlife in the implementation of this section.

end insert

begin insert

begin insert SEC. 34. end insert   

end insert

begin insert Section 19332.5 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19332.5.  

(a) Not later than January 1, 2020, the Department
of Food and Agriculture begin delete in conjunction with the bureau, end delete shall make
available a certified organic designation and organic certification
program for medical begin delete marijuana, end delete begin insert cannabis cultivation, end insert if permitted
under federal law and the National Organic Program (Section 6517
of the federal Organic Foods Production Act of 1990 (7 U.S.C.
Sec. 6501 et seq.)), and Article 7 (commencing with Section
110810) of Chapter 5 of Part 5 of Division 104 of the Health and
Safety Code.

(b) The begin delete bureau end delete begin insert end insert begin insert Department of Food and Agriculture end insert may
establish appellations of origin for begin delete marijuana end delete begin insert cannabis end insert grown in
California.

(c) It is unlawful for medical begin delete marijuana end delete begin insert cannabis end insert to be marketed,
labeled, or sold as grown in a California county when the medical
begin delete marijuana end delete begin insert cannabis end insert was not grown in that county.

(d) It is unlawful to use the name of a California county in the
labeling, marketing, or packaging of medical begin delete marijuana end delete begin insert cannabis end insert
products unless the product was grown in that county.

begin insert

begin insert SEC. 35. end insert   

end insert

begin insert Section 19334 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19334.  

(a) State licenses to be issued by the Department of
Consumer Affairs are as follows:

(1) “Dispensary,” begin insert Type 10 license end insert as defined in this chapter.
This license shall allow for delivery pursuant to Section 19340.

(2) “Distributor,” begin insert Type 11 license end insert for the distribution of medical
cannabis and medical cannabis products from manufacturer to
dispensary. A begin delete Type 11 end delete begin insert distributor end insert licensee shall hold a Type begin delete 12, end delete
begin insert 12 end insert or begin delete transporter, license and register each end delete begin insert transporter license.
Each end insert location where product is stored for the purposes of
begin delete distribution. end delete begin insert distribution must be individually licensed. end insert A begin delete Type 11 end delete
begin insert distributor end insert licensee shall not hold a license in a cultivation,
manufacturing, dispensing, or testing license category and shall
not own, or have an ownership interest in, begin delete a facility end delete begin insert premises end insert
licensed in those categories other than a security interest, lien, or
encumbrance on property that is used by a licensee. A begin delete Type 11
licensee end delete begin insert distributor end insert shall be bonded and insured at a minimum
level established by the licensing authority.

begin insert

(3) “Producing dispensary,” Type 10A for dispensers who have
no more than three licensed dispensary facilities and wish to hold
either a cultivation or manufacturing license or both. This license
shall allow for delivery where expressly authorized by local
ordinance. Each dispensary must be individually licensed.

end insert begin delete

(3)

end delete

begin insert (4) end insert  “Transport,” begin insert Type 12 license end insert for transporters of medical
cannabis or medical cannabis products between licensees. A Type
12 licensee shall be bonded and insured at a minimum level
established by the licensing authority.

begin delete

(4) “Special dispensary status” for dispensers who have no more
than three licensed dispensary facilities. This license shall allow
for delivery where expressly authorized by local ordinance.

end delete

(b) The bureau shall establish minimum security requirements
for the commercial begin delete transportation end delete begin insert transportation, storage, end insert and
delivery of medical cannabis and begin insert medical cannabis end insert products.

begin insert

(c) The State Department of Public Health shall establish
minimum security requirements for the storage of medical cannabis
products at the manufacturing site.

end insert begin delete

(c)

end delete

begin insert (d) end insert  A licensed dispensary shall implement sufficient security
measures to both deter and prevent unauthorized entrance into
areas containing medical cannabis or medical cannabis products
and theft of medical cannabis or medical cannabis products at the
dispensary. These security measures shall include, but not be
limited to, all of the following:

(1) Preventing individuals from remaining on the premises of
the dispensary if they are not engaging in activity expressly related
to the operations of the dispensary.

(2) Establishing limited access areas accessible only to
authorized dispensary personnel.

(3) Storing all finished medical cannabis and medical cannabis
products in a secured and locked room, safe, or vault, and in a
manner as to prevent diversion, theft, and loss, except for limited
amounts of cannabis used for display purposes, samples, or
immediate sale.

begin delete

(d)

end delete

begin insert (e) end insert  A dispensary shall notify the licensing authority and the
appropriate law enforcement authorities within 24 hours after
discovering any of the following:

(1) Significant discrepancies identified during inventory. The
level of significance shall be determined by the bureau.

(2) Diversion, theft, loss, or any criminal activity begin delete involving the
dispensary or any agent or employee of the dispensary. end delete begin insert pertaining
to the operation of the dispensary. end insert

begin insert

(3) Diversion, theft, loss, or any criminal activity by any agent
or employee of the dispensary pertaining to the operation of the
dispensary.

end insert begin delete

(3)

end delete

begin insert (4) end insert  The loss or unauthorized alteration of records related to
begin delete cannabis, end delete begin insert medical cannabis or medical cannabis products, end insert
registered qualifying patients, primary caregivers, or dispensary
employees or agents.

begin delete

(4)

end delete

begin insert (5) end insert  Any other breach of security.

begin insert

begin insert SEC. 36. end insert   

end insert

begin insert Section 19335 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19335.  

(a) The Department of Food and Agriculture, in
consultation with the bureau, shall establish a track and trace
program for reporting the movement of medical begin delete marijuana end delete begin insert cannabis end insert
items throughout the distribution chain that utilizes a unique
identifier pursuant to Section 11362.777 of the Health and Safety
Code and secure packaging and is capable of providing information
that captures, at a minimum, all of the following:

(1) The licensee receiving the product.

(2) The transaction date.

(3) The cultivator from which the product originates, including
the associated unique identifier, pursuant to Section 11362.777 of
the Health and Safety Code.

(b) (1) The Department of Food and begin delete Agriculture end delete begin insert Agriculture,
in consultation with the State Board of Equalization, end insert shall create
an electronic database containing the electronic shipping manifests
begin insert to facilitate the administration of the track and trace program, end insert
which shall include, but not be limited to, the following
information:

(A) The quantity, or weight, and variety of products shipped.

(B) The estimated times of departure and arrival.

(C) The quantity, or weight, and variety of products received.

(D) The actual time of departure and arrival.

(E) A categorization of the product.

(F) The license number and the unique identifier pursuant to
Section 11362.777 of the Health and Safety Code issued by the
licensing authority for all licensees involved in the shipping
process, begin delete including end delete begin insert including, but not limited to, end insert cultivators,
begin insert manufacturers, end insert transporters, distributors, and dispensaries.

(2) (A) The database shall be designed to flag irregularities for
all licensing authorities in this chapter to investigate. All licensing
authorities pursuant to this chapter may access the database and
share information related to licensees under this chapter, including
social security and individual taxpayer identifications
notwithstanding Section 30.

(B) The Department of Food and Agriculture shall immediately
inform the bureau upon the finding of an irregularity or suspicious
finding related to a licensee, applicant, or commercial cannabis
activity for investigatory purposes.

(3) Licensing authorities and state and local agencies may, at
any time, inspect shipments and request documentation for current
inventory.

(4) The bureau shall have 24-hour access to the electronic
database administered by the Department of Food and Agriculture.

begin insert The State Board of Equalization shall have read access to the
electronic database for the purpose of taxation and regulation of
medical cannabis and medical cannabis products. end insert

(5) The Department of Food and Agriculture shall be authorized
to enter into memoranda of understandings with licensing
authorities for data sharing purposes, as deemed necessary by the
Department of Food and Agriculture.

(6) Information received and contained in records kept by the
Department of Food and Agriculture or licensing authorities for
the purposes of administering this begin delete section end delete begin insert chapter end insert are confidential
and shall not be disclosed pursuant to the California Public Records
Act (Chapter 3.5 (commencing with Section 6250) of Division 7
of Title 1 of the Government Code), except as necessary for
authorized employees of the State of California or any city, county,
or city and county to perform official duties pursuant to this chapter
or a local ordinance.

(7) Upon the request of a state or local law enforcement agency,
licensing authorities shall allow access to or provide information
contained within the database to assist law enforcement in their
duties and responsibilities pursuant to this chapter.

begin insert

begin insert SEC. 37. end insert   

end insert

begin insert Section 19341 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19341.  

The State Department of Public Health shall promulgate
regulations governing the licensing of begin delete cannabis manufacturers and
testing laboratories. end delete begin insert manufacturers. The State Department of Public
Health shall develop standards for the manufacturing and labeling
of all manufactured medical cannabis products. end insert Licenses to be
issued are as follows:

(a) “Manufacturing level 1,” for manufacturing sites that produce
medical cannabis products using nonvolatile solvents.

(b) “Manufacturing level 2,” for manufacturing sites that
produce medical cannabis products using volatile solvents. The
State Department of Public Health shall limit the number of
licenses of this type.

begin delete

(c) “Testing,” for testing of medical cannabis and medical
cannabis products. Testing licensees shall have their facilities
licensed according to regulations set forth by the division. A testing
licensee shall not hold a license in another license category of this
chapter and shall not own or have ownership interest in a facility
licensed pursuant to this chapter.

end delete

begin insert

begin insert SEC. 38. end insert   

end insert

begin insert Section 19342 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19342.  

(a) For the purposes of testing medical cannabis or
medical cannabis products, licensees shall use a begin delete licensed end delete testing
laboratory that has adopted a standard operating procedure using
methods consistent with general requirements begin delete for the competence
of testing and calibration activities, including sampling, using
standard methods end delete established by the International Organization
for Standardization, specifically begin delete ISO/IEC 17020 and end delete ISO/IEC
begin delete 17025 end delete begin insert 17025, end insert to test medical cannabis and medical cannabis
begin delete products that are approved by an accrediting body end delete begin insert products. The
testing laboratory shall be accredited by a body end insert that is a signatory
to the International Laboratory Accreditation Cooperation Mutual
Recognition Arrangement.

(b) An agent of a begin delete licensed end delete testing laboratory shall obtain samples
according to a statistically valid sampling method for each lot.

(c) A begin delete licensed end delete testing laboratory shall analyze samples according
to begin delete either end delete begin insert both end insert of the following:

(1)  begin delete The most current version of the cannabis inflorescence
monograph published by the American Herbal Pharmacopoeia. end delete begin insert In
the final form that the medical cannabis or medical cannabis
products will be consumed or used, including moisture content
and other attributes. end insert

(2)  begin delete Scientifically end delete begin insert A scientifically end insert valid begin delete methodology that is
demonstrably equal or superior to paragraph (1), in the opinion of
the accrediting body. end delete begin insert methodology, as determined by the bureau. end insert

(d) If a test result falls outside the specifications authorized by
law or regulation, the begin delete licensed end delete testing laboratory shall follow a
standard operating procedure to confirm or refute the original
result.

(e) A begin delete licensed end delete testing laboratory shall destroy the remains of
the sample of medical cannabis or medical cannabis product upon
completion of the analysis.

begin insert

(f) The State Department of Public Health and the Department
of Pesticide Regulation shall provide assistance to the bureau in
developing regulations, as requested by the bureau.

end insert

begin insert

begin insert SEC. 39. end insert   

end insert

begin insert Section 19343 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19343.  

A begin delete licensed end delete testing laboratory shall not begin delete handle, test, or
analyze medical cannabis or medical cannabis products end delete begin insert be licensed
by the bureau end insert unless the begin delete licensed testing end delete laboratory meets all of
the following:

begin delete

(a) Is registered by the State Department of Public Health.

end delete begin delete

(b) Is independent from all other persons and entities involved
in the medical cannabis industry.

end delete begin insert

(a) A testing laboratory shall not hold a license in another
license category under this chapter and shall not own or have an
ownership interest in any other entity or premises licensed under
a different category pursuant to this chapter.

end insert begin delete

(c)

end delete

begin insert (b) end insert  Follows the methodologies, ranges, and parameters that are
contained in the scope of the accreditation for testing medical
cannabis or medical cannabis products. The testing begin delete lab end delete begin insert laboratory end insert
shall also comply with any other requirements specified by the

begin delete State Department of Public Health. end delete begin insert bureau. end insert

begin delete

(d)

end delete

begin insert (c) end insert  Notifies the begin delete State Department of Public Health end delete begin insert bureau end insert within
one business day after the receipt of notice of any kind that its
accreditation has been denied, suspended, or revoked.

begin delete

(e)

end delete

begin insert (d) end insert  Has established standard operating procedures that provide
for adequate chain of custody controls for samples transferred to
the begin delete licensed end delete testing laboratory for testing.

begin insert

begin insert SEC. 40. end insert   

end insert

begin insert Section 19344 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19344.  

(a) A begin delete licensed end delete testing laboratory shall issue a certificate
of analysis for each lot, with supporting data, to report both of the
following:

(1) Whether the chemical profile of the lot conforms to the
specifications of the lot for compounds, including, but not limited
to, all of the begin delete following: end delete begin insert following, unless limited through regulation
by the bureau: end insert

(A) Tetrahydrocannabinol (THC).

(B) Tetrahydrocannabinolic Acid (THCA).

(C) Cannabidiol (CBD).

(D) Cannabidiolic Acid (CBDA).

(E)  begin delete The terpenes described in the most current version of the
cannabis inflorescence monograph published by the American
Herbal Pharmacopoeia. end delete begin insert Terpenes required by the bureau in a
regulation. end insert

(F) Cannabigerol (CBG).

(G) Cannabinol (CBN).

(H) Any other compounds begin insert or contaminants end insert required by the begin delete State
Department of Public Health. end delete begin insert bureau. end insert

(2) That the presence of contaminants does not exceed the levels

begin delete that are the lesser of either the most current version of the American
Herbal Pharmacopoeia monograph or the State Department of
Public Health. For purposes of this paragraph, contaminants
includes, but is not limited to, all of the following: end delete begin insert set by the
bureau. In setting the levels, the bureau shall consider the
American Herbal Pharmacopoeia monograph, guidelines set by
the Department of Pesticide Regulation pursuant to subdivision
(b) of Section 19332, and any other relevant sources. end insert

(A) Residual solvent or processing chemicals.

(B) Foreign material, including, but not limited to, hair, insects,
or similar or related adulterant.

(C) Microbiological begin delete impurity, including total aerobic microbial
count, total yeast mold count, P. aeruginosa, aspergillus spp., s.
aureus, aflatoxin B1, B2, G1, or G2, or ochratoxin A. end delete begin insert end insert begin insert impurities
as identified by the bureau in regulation. end insert

begin delete

(D) Whether the batch is within specification for odor and
appearance.

end delete

(b) Residual levels of volatile organic compounds shall be below
the lesser of either the specifications set by the United States
Pharmacopeia (U.S.P. Chapter 467) or those set by the begin delete State
Department of Public Health. end delete begin insert bureau. end insert

begin insert

begin insert SEC. 41. end insert   

end insert

begin insert Section 19345 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19345.  

(a) Except as provided in this chapter, a begin delete licensed end delete testing
laboratory shall not acquire or receive medical cannabis or medical
cannabis products except from a begin delete licensed facility end delete begin insert licensee end insert in
accordance with this chapter, and shall not distribute, sell, deliver,
transfer, transport, or dispense medical cannabis or medical
cannabis products, from begin delete which end delete begin insert the licensed premises end insert the medical
cannabis or medical cannabis products were acquired or received.
All transfer or transportation shall be performed pursuant to a
specified chain of custody protocol.

(b) A begin delete licensed end delete testing laboratory may receive and test samples
of medical cannabis or medical cannabis products from a qualified
patient or primary caregiver only if he or she presents his or her
valid recommendation for cannabis for medical purposes from a
physician. A begin delete licensed end delete testing laboratory shall not certify samples
from a qualified patient or caregiver for resale or transfer to another
party or licensee. All tests performed by a begin delete licensed end delete testing
laboratory for a qualified patient or caregiver shall be recorded
with the name of the qualified patient or caregiver and the amount
of medical cannabis or medical cannabis product received.

(c) The begin delete State Department of Public Health end delete begin insert bureau end insert shall develop
procedures begin insert related end insert to begin delete ensure that end delete begin insert all of the following: end insert

begin insert (1) end insert begin insert   end insert begin insert Ensuring that end insert testing of begin insert medical end insert cannabis begin insert and medical
cannabis products end insert occurs prior to delivery to dispensaries or any
other begin delete business, specify how end delete begin insert business. end insert

begin insert (2) end insert begin insert   end insert begin insert Specifying how end insert often licensees shall test begin insert medical end insert cannabis
and begin delete that the cost of testing shall be borne by the licensed
cultivators, and require destruction end delete begin insert medical cannabis products. end insert

begin insert (3) end insert begin insert   end insert begin insert Requiring the destruction end insert of harvested batches whose testing
samples indicate noncompliance with health and safety standards
begin delete promulgated by the State Department of Public Health, end delete begin insert required
by state law, end insert unless remedial measures can bring the begin insert medical end insert
cannabis begin insert or medical cannabis products end insert into compliance with
quality assurance standards as begin delete promulgated by the State Department
of Public Health. end delete begin insert specified by state law. end insert

(d)  begin delete The State Department of Public Health shall establish a
licensing fee, and laboratories shall pay a fee to be licensed.
Licensing fees shall not exceed the reasonable regulatory cost of
the licensing activities. end delete begin insert Cultivators and manufacturers shall pay
all costs related to and associated with the testing of medical
cannabis and medical cannabis products required by this chapter. end insert

begin insert

begin insert SEC. 42. end insert   

end insert

begin insert Section 19347 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19347.  

(a) Prior to delivery begin insert by end insert or sale at a dispensary, medical
cannabis begin insert and medical cannabis end insert products shall be labeled and in begin delete a
tamper-evident package. Labels and packages end delete begin insert tamper proof
packaging end insert begin insert and shall include a unique identifier, as prescribed by
the Department of Food and Agriculture, for the purpose of
identifying and tracking medical cannabis or medical cannabis
products end insert begin insert . Packages end insert of medical cannabis begin insert and medical cannabis end insert
products shall meet the following requirements:

(1) Medical cannabis packages and labels shall not be made to
be attractive to children.

(2) All medical cannabis begin insert and medical cannabis end insert product labels
shall include the following information, prominently displayed
and in a clear and legible font:

(A)  begin delete Manufacture end delete begin insert Cultivation and manufacture end insert date and source.

(B) The statement “SCHEDULE I CONTROLLED
SUBSTANCE.”

(C) The statement “KEEP OUT OF REACH OF CHILDREN
AND ANIMALS” in bold print.

(D) The statement “FOR MEDICAL USE ONLY.”

(E) The statement “THE INTOXICATING EFFECTS OF THIS
PRODUCT MAY BE DELAYED BY UP TO TWO HOURS.”

(F) The statement “THIS PRODUCT MAY IMPAIR THE
ABILITY TO DRIVE OR OPERATE MACHINERY. PLEASE
USE EXTREME CAUTION.”

(G) For packages containing only dried flower, the net weight
of medical cannabis in the package.

(H) A warning if nuts or other known allergens are begin delete used. end delete begin insert used
in the manufacturing of the medical cannabis products. end insert

(I) List of begin insert ingredients and end insert pharmacologically active ingredients,
including, but not limited to, tetrahydrocannabinol (THC),
cannabidiol (CBD), and other cannabinoid content, the begin delete THC end delete begin insert THC,
CBD, end insert and other cannabinoid amount in milligrams per serving,
servings per package, and the begin delete THC end delete begin insert THC, CBD, end insert and other
cannabinoid amount in milligrams for the package total.

(J) Clear indication, in bold type, that the product contains
medical cannabis.

begin delete

(K) Identification of the source and date of cultivation and
manufacture.

end delete begin delete

(L)

end delete

begin insert (K) end insert  Any other requirement set by the begin delete bureau. end delete begin insert bureau or the
State Department of Public Health. end insert

begin delete

(M)

end delete

begin insert (L) end insert  Information associated with the unique identifier issued by
the Department of Food and Agriculture pursuant to Section
11362.777 of the Health and Safety Code.

begin insert

(M) All manufactured and edible medical cannabis products
shall be sold only in special packaging constructed to be
child-resistant unless otherwise exempted by regulation.

end insert

(b) Only generic food names may be used to describe edible
medical cannabis products.

begin insert

begin insert SEC. 43. end insert   

end insert

begin insert Section 19347.1 is added to the end insert begin insert Business and
Professions Code end insert begin insert , to read: end insert

begin insert

begin insert 19347.1. end insert   

(a) The State Department of Public Health may issue
a citation, which may contain an order of abatement and an order
to pay an administrative fine assessed by the department where
the licensee is in violation of this chapter or any regulation adopted
pursuant to it.

(1) Citations shall be in writing and shall describe with
particularity the nature of the violation, including specific
reference to the provision of law determined to have been violated.

(2) Whenever appropriate, the citation shall contain an order
of abatement fixing a reasonable time for abatement of the
violation.

(3) In no event shall the administrative fine assessed by the State
Department of Public Health exceed five thousand dollars ($5,000)
for each violation, unless a different fine amount is expressly
provided by this chapter. In assessing a fine, the licensing authority
shall give due consideration to the appropriateness of the amount
of the fine with respect to factors such as the gravity of the
violation, the good faith of the licensee, and the history of previous
violations.

(4) A citation issued or a fine assessed pursuant to this section
shall notify the licensee that if the licensee desires a hearing to
contest the finding of a violation, that hearing shall be requested
by written notice to the State Department of Public Health within
30 days of the date of issuance of the citation or fine. If a hearing
is not requested pursuant to this section, payment of any fine shall
not constitute an admission of the violation charged. Hearings
shall be held pursuant to Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code.

(5) Failure of a licensee to pay a fine within 30 days of the date
of assessment of the fine, unless assessment of the fine or the
citation is being appealed, may result in further legal action being
taken by the State Department of Public Health. If a licensee does
not contest a citation or pay the fine, the full amount of the fine
shall be added to the fee for renewal of the license. A license shall
not be renewed without payment of the renewal fee, including the
amount of the fine.

(6) A citation may be issued without the assessment of an
administrative fine.

(7) The State Department of Public Health may limit the
assessment of administrative fines to only particular violations of
the chapter and establish any other requirement for implementation
of the citation system by regulation.

(b) Notwithstanding any other law, if a fine is paid to satisfy an
assessment based on the finding of a violation, payment of the fine
shall be represented as satisfactory resolution of the matter for
purposes of public disclosure.

end insert

begin insert

begin insert SEC. 44. end insert   

end insert

begin insert Section 19347.2 is added to the end insert begin insert Business and
Professions Code end insert begin insert , to read: end insert

begin insert

begin insert 19347.2. end insert   

The State Department of Public Health may, in
addition to the administrative citation system authorized by Section
19347.1, also establish by regulation a similar system for the
issuance of an administrative citation to an unlicensed person who
is acting in the capacity of a licensee under the jurisdiction of the
State Department of Public Health as pertains to this chapter. The
administrative citation system authorized by this section shall meet
the requirements of Section 19347.1 and shall not be applied to
an unlicensed person who is otherwise exempt from the licensing
provisions of this chapter. The establishment of an administrative
citation system for unlicensed activity does not preclude the use
of other enforcement statutes for unlicensed activities at the
discretion of the State Department of Public Health.

end insert

begin insert

begin insert SEC. 45. end insert   

end insert

begin insert Section 19347.3 is added to the end insert begin insert Business and
Professions Code end insert begin insert , to read: end insert

begin insert

begin insert 19347.3. end insert   

In determining whether to exercise its discretion when
enforcing this chapter, the State Department of Public Health may
consider whether the public interest will be adequately served in
the circumstances by a suitable written notice or warning. The
State Department of Public Health may also require licensees to
provide it with a written plan of correction and correct a violation
within a timeframe the State Department of Public Health deems
necessary under the circumstances.

end insert

begin insert

begin insert SEC. 46. end insert   

end insert

begin insert Section 19347.4 is added to the end insert begin insert Business and
Professions Code end insert begin insert , to read: end insert

begin insert

begin insert 19347.4. end insert   

The State Department of Public Health may notify
the public regarding any medical cannabis product when the State
Department of Public Health deems it necessary for the protection
of the health and safety of the consumer or for his or her protection
from fraud.

end insert

begin insert

begin insert SEC. 47. end insert   

end insert

begin insert Section 19347.5 is added to the end insert begin insert Business and
Professions Code end insert begin insert , to read: end insert

begin insert

begin insert 19347.5. end insert   

(a) A medical cannabis product is misbranded if it
is any of the following:

(1) Manufactured, packed, or held in this state in a
manufacturing site not duly licensed as provided in this chapter.

(2) Its labeling is false or misleading in any particular.

(3) Its labeling or packaging does not conform to the
requirements of Section 19347 or any other labeling or packaging
requirement established pursuant to this chapter.

(b) It is unlawful for any person to manufacture, sell, deliver,
hold, or offer for sale a medical cannabis product that is
misbranded.

(c) It is unlawful for any person to misbrand a medical cannabis
product.

(d) It is unlawful for any person to receive in commerce a
medical cannabis product that is misbranded or to deliver or offer
for delivery any such medical cannabis product.

end insert

begin insert

begin insert SEC. 48. end insert   

end insert

begin insert Section 19347.6 is added to the end insert begin insert Business and
Professions Code end insert begin insert , to read: end insert

begin insert

begin insert 19347.6. end insert   

(a) A medical cannabis product is adulterated if it
is any of the following:

(1) It has been produced, prepared, packed, or held under
insanitary conditions in which it may have become contaminated
with filth or in which it may have been rendered injurious.

(2) It consists in whole or in part of any filthy, putrid, or
decomposed substance.

(3) It bears or contains any poisonous or deleterious substance
that may render it injurious to users under the conditions of use
suggested in the labeling or under conditions as are customary or
usual.

(4) It bears or contains a substance that is restricted or limited
under this chapter or regulations promulgated pursuant to this
chapter and the level of substance in the product exceeds the limits
specified pursuant to this chapter or in regulation.

(5) Its concentrations differ from, or its purity or quality is
below, that which it is represented to possess.

(6) The methods, facilities, or controls used for its manufacture,
packing, or holding do not conform to or are not operated or
administered in conformity with practices established by
regulations adopted under this chapter to ensure that the medical
cannabis product meets the requirements of this chapter as to
safety and has the concentrations it purports to have and meets
the quality and purity characteristics that it purports or is
represented to possess.

(7) Its container is composed, in whole or in part, of any
poisonous or deleterious substance that may render the contents
injurious to health.

(8) It is an edible cannabis product and any substance has been
mixed or packed with it after testing by a testing laboratory so as
to reduce its quality or concentration or if any substance has been
substituted, wholly or in part, for the edible cannabis product.

(b) It is unlawful for a person to manufacture, sell, deliver, hold,
or offer for sale a medical cannabis product that is adulterated.

(c) It is unlawful for any person to adulterate a medical cannabis
product.

(d) It is unlawful for any person to receive in commerce a
medical cannabis product that is adulterated or to deliver or
proffer for delivery any such medical cannabis product.

end insert

begin insert

begin insert SEC. 49. end insert   

end insert

begin insert Section 19347.7 is added to the end insert begin insert Business and
Professions Code end insert begin insert , to read: end insert

begin insert

begin insert 19347.7. end insert   

(a) When the State Department of Public Health has
evidence that a medical cannabis product is adulterated or
misbranded, the department shall notify the manufacturer.

(b) The State Department of Public Health may order a
manufacturer to immediately cease distribution of a medical
cannabis product and recall the product if the department
determines both of the following:

(1) The manufacture, distribution, or sale of the medical
cannabis product creates or poses an immediate and serious threat
to human life or health.

(2) Other procedures available to the State Department of Public
Health to remedy or prevent the occurrence of the situation would
result in an unreasonable delay.

(c) The State Department of Public Health shall provide the
manufacturer an opportunity for an informal proceeding on the
matter, as determined by the department, within five days, on the
actions required by the order and on why the product should not
be recalled. Following the proceeding, the order shall be affirmed,
modified, or set aside as determined appropriate by the State
Department of Public Health.

(d) The State Department of Public Health’s powers set forth
in this section expressly include the power to order movement,
segregation, isolation, or destruction of medical cannabis products,
as well as the power to hold those products in place.

(e) If the State Department of Public Health determines it is
necessary, it may issue the mandatory recall order and may use
all appropriate measures to obtain reimbursement from the
manufacturer for any and all costs associated with these orders.
All funds obtained by the State Department of Public Health from
these efforts shall be deposited into a fee account specific to the
State Department of Public Health, to be established in the Medical
Cannabis Regulation and Safety Act Fund, and will be available
for use by the department upon appropriation by the legislature.

(f) It is unlawful for any person to move or allow to be moved
a medical cannabis product subject to an order issued pursuant
to this section unless that person has first obtained written
authorization from the State Department of Public Health.

end insert

begin insert

begin insert SEC. 50. end insert   

end insert

begin insert Section 19347.8 is added to the end insert begin insert Business and
Professions Code end insert begin insert , to read: end insert

begin insert

begin insert 19347.8. end insert   

(a) Whenever the State Department of Public Health
finds or has probable cause to believe that any medical cannabis
product is adulterated or misbranded within the meaning of this
chapter or the sale of the medical cannabis product would be in
violation of this chapter, the department shall affix to the medical
cannabis product, or component thereof, a tag or other appropriate
marking. The State Department of Public Health shall give notice
that the medical cannabis product is, or is suspected of being,
adulterated or misbranded, or the sale of which would be in
violation of this chapter and has been embargoed and that no
person shall remove or dispose of the medical cannabis product
by sale or otherwise until permission for removal or disposal is
given by the State Department of Public Health or a court.

(b) It is unlawful for any person to remove, sell, or dispose of
a detained or embargoed medical cannabis product without written
permission of the State Department of Public Health or a court.
A violation of this subdivision is subject to a fine of not more than
ten thousand dollars ($10,000).

(c) If the adulteration or misbranding can be corrected by
proper labeling or additional processing of the medical cannabis
product and all of the provisions of this chapter can be complied
with, the claimant or owner may request the State Department of
Public Health to remove the tag or other marking. If, under the
supervision of the State Department of Public Health, the
adulteration or misbranding has been corrected, the department
may remove the tag or other marking.

(d) When the State Department of Public Health finds that a
medical cannabis product that is embargoed is not adulterated,
misbranded, or whose sale is not otherwise in violation of this
chapter, the State Department of Public Health may remove the
tag or other marking.

(e) The medical cannabis product may be destroyed by the owner
pursuant to a corrective action plan approved by the State
Department of Public Health and under the supervision of the
department. The medical cannabis product shall be destroyed at
the expense of the claimant or owner.

(f) A proceeding for condemnation of any medical cannabis
product under this section shall be subject to appropriate notice
to, and the opportunity for a hearing with regard to, the person
affected in accordance with Section 19308.

(g) Upon a finding by the administrative law judge that the
medical cannabis product is adulterated, misbranded, or whose
sale is otherwise in violation of this chapter, the administrative
law judge may direct the medical cannabis product to be destroyed
at the expense of the claimant or owner. The administrative law
judge may also direct a claimant or owner of the affected medical
cannabis product to pay fees and reasonable costs, including the
costs of storage and testing, incurred by the bureau or the
Department of Public Health in investigating and prosecuting the
action taken pursuant to this section.

(h) When, under the supervision of the State Department of
Public Health, the adulteration or misbranding has been corrected
by proper labeling or additional processing of the medical
cannabis and medical cannabis product and when all provisions
of this chapter have been complied with, and after costs, fees, and
expenses have been paid, the State Department of Public Health
may release the embargo and remove the tag or other marking
and the medical cannabis shall no longer be held for sale in
violation of this chapter.

(i) The State Department of Public Health may condemn any
medical cannabis product under provisions of this chapter. The
medical cannabis product shall be destroyed at the expense of the
claimant or owner.

end insert

begin insert

begin insert SEC. 51. end insert   

end insert

begin insert Section 19350 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19350.  

Each licensing authority shall establish a scale of
application, licensing, and renewal fees, based upon the cost of
enforcing this chapter, as follows:

(a) Each licensing authority shall charge each licensee a
licensure and renewal fee, as applicable. The licensure and renewal
fee shall be calculated to cover the costs of administering this
chapter. The licensure fee may vary depending upon the varying
costs associated with administering the various regulatory
requirements of this chapter as they relate to the nature and scope
of the different licensure activities, including, but not limited to,
the track and trace program required pursuant to Section 19335,
but shall not exceed the reasonable regulatory costs to the licensing
authority.

(b) The total fees assessed pursuant to this chapter shall be set
at an amount that will fairly and proportionately generate sufficient
total revenue to fully cover the total costs of administering this
chapter.

(c) All license fees shall be set on a scaled basis by the licensing
authority, dependent on the size of the business. begin insert License fees shall
cover the costs of administering the track and trace program
managed by the Department of Food and Agriculture, as identified
in Article 7.5 (commencing with Section 19335). end insert

(d) The licensing authority shall deposit all fees collected in a
fee account specific to that licensing authority, to be established
in the Medical begin delete Marijuana end delete begin insert Cannabis end insert Regulation and Safety Act
Fund. Moneys in the licensing authority fee accounts shall be used,
upon appropriation of the Legislature, by the designated licensing
authority for the administration of this chapter.

begin insert

begin insert SEC. 52. end insert   

end insert

begin insert Section 19351 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19351.  

(a) The Medical begin delete Marijuana end delete begin insert Cannabis end insert Regulation and
Safety Act Fund is hereby established within the State Treasury.
Moneys in the fund shall be available upon appropriation by the
Legislature. Notwithstanding Section 16305.7 of the Government
Code, the fund shall include any interest and dividends earned on
the moneys in the fund.

(b) (1) Funds for the establishment and support of the regulatory
activities pursuant to this chapter shall be advanced as a General
Fund or special fund loan, and shall be repaid by the initial
proceeds from fees collected pursuant to this chapter or any rule
or regulation adopted pursuant to this chapter, by January 1, 2022.
Should the initial proceeds from fees not be sufficient to repay the
loan, moneys from the Medical Cannabis Fines and Penalties
Account shall be made available to the bureau, by appropriation
of the Legislature, to repay the loan.

(2) Funds advanced pursuant to this subdivision shall be
appropriated to the bureau, which shall distribute the moneys to
the appropriate licensing authorities, as necessary to implement
the provisions of this chapter.

(3) The Director of Finance may provide an initial operating
loan from the General Fund to the Medical begin delete Marijuana end delete begin insert Cannabis end insert
Regulation and Safety Act Fund that does not exceed ten million
dollars ($10,000,000).

(c) Except as otherwise provided, all moneys collected pursuant
to this chapter as a result of fines or penalties imposed under this
chapter shall be deposited directly into the Medical begin delete Marijuana end delete
begin insert Cannabis end insert Fines and Penalties Account, which is hereby established
within the fund, and shall be available, upon appropriation by the
Legislature to the bureau, for the purposes of funding the
enforcement grant program pursuant to subdivision (d).

(d) (1) The bureau shall establish a grant program to allocate
moneys from the Medical Cannabis Fines and Penalties Account
to state and local entities for the following purposes:

(A) To assist with medical cannabis regulation and the
enforcement of this chapter and other state and local laws
applicable to cannabis activities.

(B) For allocation to state and local agencies and law
enforcement to remedy the environmental impacts of cannabis
cultivation.

(2) The costs of the grant program under this subdivision shall,
upon appropriation by the Legislature, be paid for with moneys in
the Medical Cannabis Fines and Penalties Account.

(3) The grant program established by this subdivision shall only
be implemented after the loan specified in this section is repaid.

begin insert

begin insert SEC. 53. end insert   

end insert

begin insert Section 19360 of the end insert begin insert Business and Professions Code end insert

begin insert is amended to read: end insert

19360.  

(a) A person engaging in begin insert commercial end insert cannabis activity
without a license and associated unique identifiers required by this
chapter shall be subject to civil penalties of up to twice the amount
of the license fee for each violation, and the department, state or
local authority, or court may order the destruction of medical
cannabis associated with that violation. begin insert A violator shall be
responsible for the cost of the destruction of medical cannabis
associated with his or her violation, in addition to any amount
covered by a bond required as a condition of licensure. end insert Each day
of operation shall constitute a separate violation of this section.
All civil penalties imposed and collected pursuant to this section
begin insert by a licensing authority end insert shall be deposited into the begin delete Marijuana
Production and Environment Mitigation Fund end delete begin insert end insert begin insert Medical Cannabis
Fines and Penalties Account end insert established pursuant to Section begin delete 31013
of the Revenue and Taxation Code. end delete begin insert 19351. end insert

(b) If an action for civil penalties is brought against a licensee
pursuant to this chapter by the Attorney begin delete General, end delete begin insert General on behalf
of the people, end insert the penalty collected shall be deposited into the
begin delete General Fund. end delete begin insert Medical Cannabis Fines and Penalties Account. end insert If
the action is brought by a district attorney or county counsel, the
penalty collected shall be paid to the treasurer of the county in
which the judgment was entered. If the action is brought by a city
attorney or city prosecutor, the penalty collected shall be paid to
the treasurer of the city or city and county in which the judgment
was entered. If the action is brought by a city attorney and is
adjudicated in a superior court located in the unincorporated area
or another city in the same county, the penalty shall be paid
one-half to the treasurer of the city in which the complaining
attorney has jurisdiction and one-half to the treasurer of the county
in which the judgment is entered.

(c) Notwithstanding subdivision (a), criminal penalties shall
continue to apply to an unlicensed person or entity engaging in
cannabis activity in violation of this chapter, including, but not
limited to, those individuals covered under Section 11362.7 of the
Health and Safety Code.

begin insert

begin insert SEC. 54. end insert   

end insert

begin insert Section 2154 of the end insert begin insert Elections Code end insert begin insert is amended to
read: end insert

2154.  

In the event that the county elections official receives
an affidavit of registration, executed under penalty of perjury, that
does not include portions of the information for which space is
provided, the county elections official shall apply the following
rebuttable presumptions:

(a) If no middle name or initial is shown, it shall be presumed
that none exists.

(b) If no party preference is shown, it shall be presumed that
the affiant has declined to disclose a party preference. begin insert The county
elections official shall designate the affiant’s party preference as
“Unknown” on a voter registration index under Article 5
(commencing with Section 2180) and the affiant shall otherwise
be treated as a “No Party Preference” voter. end insert

(c) If no execution date is shown, it shall be presumed that the
affidavit was executed on or before the 15th day prior to the
election, provided that (1) the affidavit is received by the county
elections official on or before the 15th day begin delete prior to end delete begin insert before end insert the
election, or (2) the affidavit is postmarked on or before the 15th
day begin delete prior to end delete begin insert before end insert the election and received by mail by the county
elections official.

(d) If the affiant fails to identify his or her state of birth within
the United States, it shall be presumed that the affiant was born in
a state or territory of the United States if the birthplace of the
affiant is shown as “United States,” “U.S.A.,” or other recognizable
term designating the United States. The affiant’s failure to furnish
his or her place of birth shall not preclude his or her affidavit of
registration from being deemed complete.

begin insert

begin insert SEC. 55. end insert   

end insert

begin insert Section 2265 of the end insert begin insert Elections Code end insert begin insert is amended to
read: end insert

2265.  

(a)  The records of a person designated in paragraph (1)
of subdivision (b) of Section 2263 shall constitute a completed
affidavit of registration and the Secretary of State shall register
the person to vote, unless any of the following conditions is
satisfied:

(1) The person’s records, as described in Section 2263, reflect
that he or she affirmatively declined to become registered to vote
during a transaction with the Department of Motor Vehicles.

(2) The person’s records, as described in Section 2263, do not
reflect that he or she has attested to meeting all voter eligibility
requirements specified in Section 2101.

(3) The Secretary of State determines that the person is ineligible
to vote.

(b)  begin delete (1) end delete begin delete   end delete If a person who is registered to vote pursuant to this
chapter does not provide a party preference, his or her party
preference shall be designated as “Unknown” begin insert on a voter
registration index under Article 5 (commencing with Section 2180)
of Chapter 2, end insert and he or she shall begin insert otherwise end insert be treated as a “No
Party Preference” voter.

begin delete

(2) A person whose party preference is designated as
“Unknown” pursuant to this subdivision shall not be counted for
purposes of determining the total number of voters registered on
the specified day preceding an election, as required by subdivision
(b) of Section 5100 and subdivision (c) of Section 5151.

end delete

begin insert

begin insert SEC. 56. end insert   

end insert

begin insert Section 5100 of the end insert begin insert Elections Code end insert begin insert is amended to
read: end insert

5100.  

A party is qualified to participate in a primary election
under any of the following conditions:

(a) (1) At the last preceding gubernatorial primary election, the
sum of the votes cast for all of the candidates for an office voted
on throughout the state who disclosed a preference for that party
on the ballot was at least 2 percent of the entire vote of the state
for that office.

(2) Notwithstanding paragraph (1), a party may inform the
Secretary of State that it declines to have the votes cast for begin delete any end delete begin insert a end insert
candidate who has disclosed that party as his or her party preference
on the ballot counted toward the 2-percent qualification threshold.
If the party wishes to have votes for begin delete any end delete begin insert a end insert candidate not counted
in support of its qualification under paragraph (1), the party shall
notify the secretary in writing of that candidate’s name by the
seventh day begin delete prior to end delete begin insert before end insert the gubernatorial primary election.

(b)  begin insert (1) end insert begin insert   end insert On or before the 135th day before a primary election,
it appears to the Secretary of State, as a result of examining and
totaling the statement of voters and their declared political
preference transmitted to him or her by the county elections
officials, that voters equal in number to at least 0.33 percent of the
total number of voters registered on the 154th day before the
primary election have declared their preference for that party.

begin insert

(2) A person whose party preference is designated as
“Unknown” pursuant to Section 2154 or 2265 shall not be counted
for purposes of determining the total number of voters registered
on the specified day preceding the election under paragraph (1).

end insert

(c) On or before the 135th day before a primary election, there
is filed with the Secretary of State a petition signed by voters, equal
in number to at least 10 percent of the entire vote of the state at
the last preceding gubernatorial election, declaring that they
represent a proposed party, the name of which shall be stated in
the petition, which proposed party those voters desire to have
participate in that primary election. This petition shall be circulated,
signed, and verified, and the signatures of the voters on it shall be
certified to and transmitted to the Secretary of State by the county
elections officials substantially as provided for initiative petitions.
Each page of the petition shall bear a caption in 18-point boldface
type, which caption shall be the name of the proposed party
followed by the words “Petition to participate in the primary
election.”

begin insert

begin insert SEC. 57. end insert   

end insert

begin insert Section 5151 of the end insert begin insert Elections Code end insert begin insert is amended to
read: end insert

5151.  

A party is qualified to participate in a presidential general
election under any of the following conditions:

(a) The party qualified to participate and participated in the
presidential primary election preceding the presidential general
election pursuant to Section 5100.

(b) (1) At the last preceding gubernatorial primary election, the
sum of the votes cast for all of the candidates for an office voted
on throughout the state who disclosed a preference for that party
on the ballot was at least 2 percent of the entire vote of the state
for that office.

(2) Notwithstanding paragraph (1), a party may inform the
Secretary of State that it declines to have the votes cast for begin delete any end delete begin insert a end insert
candidate who has disclosed that party as his or her party preference
on the ballot counted toward the 2-percent qualification threshold.
If the party wishes to have votes for begin delete any end delete begin insert a end insert candidate not counted
in support of its qualification under paragraph (1), the party shall
notify the secretary in writing of that candidate’s name by the
seventh day begin delete prior to end delete begin insert before end insert the gubernatorial primary election.

(c)  begin insert (1) end insert begin insert   end insert If on or before the 102nd day before a presidential
general election, it appears to the Secretary of State, as a result of
examining and totaling the statement of voters and their declared
political preference transmitted to him or her by the county
elections officials, that voters equal in number to at least 0.33
percent of the total number of voters registered on the 123rd day
before the presidential general election have declared their
preference for that party.

begin insert

(2) A person whose party preference is designated as
“Unknown” pursuant to Section 2154 or 2265 shall not be counted
for purposes of determining the total number of voters registered
on the specified day preceding the election under paragraph (1).

end insert

(d) On or before the 135th day before a presidential general
election, there is filed with the Secretary of State a petition signed
by voters, equal in number to at least 10 percent of the entire vote
of the state at the last preceding gubernatorial election, declaring
that they represent a proposed party, the name of which shall be
stated in the petition, which proposed party those voters desire to
have participate in that presidential general election. This petition
shall be circulated, signed, and verified, and the signatures of the
voters on it shall be certified to and transmitted to the Secretary
of State by the county elections officials substantially as provided
for initiative petitions. Each page of the petition shall bear a caption
in 18-point boldface type, which caption shall be the name of the
proposed party followed by the words “Petition to participate in
the presidential general election.”

begin insert

begin insert SEC. 58. end insert   

end insert

begin insert Section 1602 of the end insert begin insert Fish and Game Code end insert begin insert is amended
to read: end insert

1602.  

(a) An entity may not substantially divert or obstruct
the natural flow of, or substantially change or use any material
from the bed, channel, or bank of, any river, stream, or lake, or
deposit or dispose of debris, waste, or other material containing
crumbled, flaked, or ground pavement where it may pass into any
river, stream, or lake, unless all of the following occur:

(1) The department receives written notification regarding the
activity in the manner prescribed by the department. The
notification shall include, but is not limited to, all of the following:

(A) A detailed description of the project’s location and a map.

(B) The name, if any, of the river, stream, or lake affected.

(C) A detailed project description, including, but not limited to,
construction plans and drawings, if applicable.

(D) A copy of any document prepared pursuant to Division 13
(commencing with Section 21000) of the Public Resources Code.

(E) A copy of any other applicable local, state, or federal permit
or agreement already issued.

(F) Any other information required by the department.

(2) The department determines the notification is complete in
accordance with Chapter 4.5 (commencing with Section 65920)
of Division 1 of Title 7 of the Government Code, irrespective of
whether the activity constitutes a development project for the
purposes of that chapter.

(3) The entity pays the applicable fees, pursuant to Section 1609.

(4) One of the following occurs:

begin delete

(A)

end delete begin delete end delete begin delete

(i) The

end delete

begin insert (A) end insert begin insert   end insert begin insert (i) end insert begin insert   end insert begin insert The end insert department informs the entity, in writing, that the
activity will not substantially adversely affect an existing fish or
wildlife resource, and that the entity may commence the activity
without an agreement, if the entity conducts the activity as
described in the notification, including any measures in the
notification that are intended to protect fish and wildlife resources.

(ii) Each region of the department shall log the notifications of
activities where no agreement is required. The log shall list the
date the notification was received by the department, a brief
description of the proposed activity, and the location of the activity.
Each item shall remain on the log for one year. Upon written
request by any person, a regional office shall send the log to that
person monthly for one year. A request made pursuant to this
clause may be renewed annually.

(B) The department determines that the activity may
substantially adversely affect an existing fish or wildlife resource
and issues a final agreement to the entity that includes reasonable
measures necessary to protect the resource, and the entity conducts
the activity in accordance with the agreement.

(C) A panel of arbitrators issues a final agreement to the entity
in accordance with subdivision (b) of Section 1603, and the entity
conducts the activity in accordance with the agreement.

(D) The department does not issue a draft agreement to the
entity within 60 days from the date notification is complete, and
the entity conducts the activity as described in the notification,
including any measures in the notification that are intended to
protect fish and wildlife resources.

(b) (1) If an activity involves the routine maintenance and
operation of water supply, drainage, flood control, or waste
treatment and disposal facilities, notice to and agreement with the
department shall not be required after the initial notification and
agreement, unless the department determines either of the
following:

(A) The work described in the agreement has substantially
changed.

(B) Conditions affecting fish and wildlife resources have
substantially changed, and those resources are adversely affected
by the activity conducted under the agreement.

(2) This subdivision applies only if notice to, and agreement
with, the department was attained prior to January 1, 1977, and
the department has been provided a copy of the agreement or other
proof of the existence of the agreement that satisfies the
department, if requested.

begin insert

(c) (1) Notwithstanding subdivision (a), an entity shall not be
required to obtain an agreement with the department pursuant to
this chapter for activities authorized by a license or renewed
license for cannabis cultivation issued by the Department of Food
and Agriculture for the term of the license or renewed license if
all of the following occur:

end insert begin insert

(A) The entity submits all of the following to the department:

end insert begin insert

(i) The written notification described in paragraph (1) of
subdivision (a).

end insert begin insert

(ii) A copy of the license or renewed license for cannabis
cultivation issued by the Department of Food and Agriculture that
includes the requirements specified in subdivisions (d), (e), and
(f) of Section 19332.2 of the Business and Professions Code.

end insert begin insert

(iii) The fee specified in paragraph (3) of subdivision (a).

end insert begin insert

(B) The department determines in its sole discretion that
compliance with the requirements specified in subdivisions (d),
(e), and (f) of Section 19332.2 of the Business and Professions
Code that are included in the license will adequately protect
existing fish and wildlife resources that may be substantially
adversely affected by the cultivation without the need for additional
measures that the department would include in a draft streambed
alteration agreement in accordance with Section 1603.

end insert begin insert

(C) The department notifies the entity in writing that the
exemption applies to the cultivation authorized by the license or
renewed license.

end insert begin insert

(2) The department shall notify the entity in writing whether the
exemption in paragraph (1) applies to the cultivation authorized
by the license or renewed license within 60 days from the date that
the notification is complete and the fee has been paid.

end insert begin insert

(3) If an entity receives an exemption pursuant to this
subdivision and fails to comply with any of the requirements
described in subdivision (d), (e), or (f) of Section 19332.2 of the
Business and Professions Code that are included in the license,
the failure shall constitute a violation under this section, and the
department shall notify the Department of Food and Agriculture
of any enforcement action taken.

end insert begin delete

(c)

end delete

begin insert (d) end insert  It is unlawful for any person to violate this chapter.

begin insert

begin insert SEC. 59. end insert   

end insert

begin insert Section 1617 is added to the end insert begin insert Fish and Game Code end insert begin insert ,
to read: end insert

begin insert

begin insert 1617. end insert   

(a) The department may adopt regulations establishing
the requirements and procedure for the issuance of a general
agreement in a geographic area for a category or categories of
activities related to cannabis cultivation.

(b) A general agreement adopted by the department subsequent
to adoption of regulations under this section shall be in lieu of an
individual agreement described in subparagraph (B) of paragraph
(4) of subdivision (a) of Section 1602.

(c) Subparagraph (D) of paragraph (4) of subdivision (a) of
Section 1602 and all other time periods to process agreements
specified in this chapter do not apply to the issuance of a general
agreement adopted by the department pursuant to this section.

(d) The department general agreement issued by the department
pursuant to this section is a final agreement and is not subject to
Section 1603 or 1604.

(e) The department shall charge a fee for a general agreement
adopted by the department under this section in accordance with
Section 1609.

(f) Regulations adopted pursuant to this section, and any
amendment thereto, shall not be subject to Division 13
(commencing with Section 21000) of the Public Resources Code.

end insert

begin insert

begin insert SEC. 60. end insert   

end insert

begin insert Section 12025.2 of the end insert begin insert Fish and Game Code end insert begin insert is
amended to read: end insert

12025.2.  

The director or his or her designee may issue a
complaint to any person or entity in accordance with Section 1055
of the Water Code alleging a violation begin delete of end delete begin insert for which liability may
be imposed under end insert Section 1052 begin insert or 1847 end insert of the Water Code that
harms fish and wildlife resources. The complaint is subject to the
substantive and procedural requirements set forth in Section 1055
of the Water Code, and the department shall be designated a party
to any proceeding before the State Water Resources Control Board
regarding a complaint filed pursuant to this section.

begin insert

begin insert SEC. 61. end insert   

end insert

begin insert Section 12029 of the end insert begin insert Fish and Game Code end insert begin insert is amended
to read: end insert

12029.  

(a) The Legislature finds and declares all of the
following:

(1) The environmental impacts associated with begin delete marijuana end delete
begin insert cannabis end insert cultivation have increased, and unlawful water diversions
for begin delete marijuana end delete begin insert cannabis end insert irrigation have a detrimental effect on fish
and wildlife and their habitat, which are held in trust by the state
for the benefit of the people of the state.

(2) The remediation of existing begin delete marijuana end delete begin insert cannabis end insert cultivation
sites is often complex and the permitting of these sites requires
greater department staff time and personnel expenditures. The
potential for begin delete marijuana end delete begin insert cannabis end insert cultivation sites to significantly
impact the state’s fish and wildlife resources requires immediate
action on the part of the department’s lake and streambed alteration
permitting staff.

(b) In order to address unlawful water diversions and other
violations of the Fish and Game Code associated with begin delete marijuana end delete
begin insert cannabis end insert cultivation, the department shall establish the watershed
enforcement program to facilitate the investigation, enforcement,
and prosecution of these offenses.

(c) The department, in coordination with the State Water
Resources Control begin delete Board, end delete begin insert Board and the Department of Food and
Agriculture, end insert shall establish a permanent multiagency task force to
address the environmental impacts of begin delete marijuana end delete begin insert cannabis end insert
cultivation. The multiagency task force, to the extent feasible and
subject to available begin delete Resources, end delete begin insert resources, end insert shall expand its
enforcement efforts on a statewide level to ensure the reduction
of adverse impacts of begin delete marijuana end delete begin insert cannabis end insert cultivation on fish and
wildlife and their habitats throughout the state.

(d) In order to facilitate the remediation and permitting of
begin delete marijuana end delete begin insert cannabis end insert cultivation sites, the department begin delete shall end delete begin insert may end insert
adopt regulations to enhance the fees on any entity subject to
Section 1602 for begin delete marijuana end delete begin insert cannabis end insert cultivation sites that require
remediation. The fee schedule established pursuant to this
subdivision shall not exceed the fee limits in Section 1609.

begin insert

begin insert SEC. 62. end insert   

end insert

begin insert Section 37104 is added to the end insert begin insert Food and Agricultural
Code end insert begin insert , to read: end insert

begin insert

begin insert 37104. end insert   

Notwithstanding Section 19300.5 of the Business and
Professions Code, butter purchased from a licensed milk products
plant or retail location that is subsequently infused or mixed with
medical cannabis at the premises or location that is not subject to
licensing as a milk product plant is exempt from the provisions of
this division.

end insert

begin insert

begin insert SEC. 63. end insert   

end insert

begin insert Section 52452 of the end insert begin insert Food and Agricultural Code end insert begin insert is
amended to read: end insert

52452.  

(a)  Except as otherwise provided in Section 52454,
each container of agricultural seed that is for sale or sold within
this state for sowing begin delete purposes, unless the sale is an occasional sale
of seed grain by the producer of the seed grain to his or her
neighbor for use by the purchaser within the county of production, end delete
begin insert purposes end insert shall bear upon it or have attached to it in a conspicuous
place a plainly written or printed label or tag in the English
language that includes all of the following information:

(1) The commonly accepted name of the kind, kind and variety,
or kind and type of each agricultural seed component in excess of
5 percent of the whole, and the percentage by weight of each. If
the aggregate of agricultural seed components, each present in an
amount not exceeding 5 percent of the whole, exceeds 10 percent
of the whole, each component in excess of 1 percent of the whole
shall be named together with the percentage by weight of each. If
more than one component is required to be named, the names of
all components shall be shown in letters of the same type and size.

(2) The lot number or other lot identification.

(3) The percentage by weight of all weed seeds.

(4) The name and approximate number of each kind of restricted
noxious weed seed per pound.

(5) The percentage by weight of any agricultural seed except
that which is required to be named on the label.

(6) The percentage by weight of inert matter. If a percentage
by weight is required to be shown by any provision of this section,
that percentage shall be exclusive of any substance that is added
to the seed as a coating and shown on the label as such.

(7) For each agricultural seed in excess of 5 percent of the
whole, stated in accordance with paragraph (1), the percentage of
germination exclusive of hard seed, the percentage of hard seed,
if present, and the calendar month and year the test was completed
to determine the percentages. Following the statement of those
percentages, the additional statement “total germination and hard
seed” may be stated.

(8) The name and address of the person who labeled the seed
or of the person who sells the seed within this state.

begin insert

(b) Subdivision (a) does not apply in the following instances:

end insert begin insert

(1) The sale is an occasional sale of seed grain by the producer
of the seed grain to his or her neighbor for use by the purchaser
within the county of production.

end insert begin insert

(2) Any cannabis seed, as defined in subdivision (f) of Section
19300.5 of the Business and Professions Code, sold or offered for
sale in the state.

end insert begin delete

(b)

end delete

begin insert (c) end insert  All determinations of noxious weed seeds are subject to
tolerances and methods of determination prescribed in the
regulations that are adopted pursuant to this chapter.

begin delete

(c)

end delete

begin insert (d) end insert  For purposes of this section, “neighbor” means a person
who lives in close proximity, not to exceed three miles, to another.

begin insert

begin insert SEC. 64. end insert   

end insert

begin insert Section 15283 is added to the end insert begin insert Government Code end insert begin insert , end insert
immediately following Section 15282 begin insert , to read: end insert

begin insert

begin insert 15283. end insert   

(a) For purposes of this section, “fund” means the
Public Safety Communications Revolving Fund.

(b) The Public Safety Communications Revolving Fund is hereby
created within the State Treasury. The fund shall be administered
by the director and shall be used, upon appropriation by the
Legislature, to pay all costs to the office resulting from this chapter
or from rendering services to the state or other public agencies,
which costs include, but are not limited to, costs of employing and
compensating necessary personnel, expenses such as operating
or other expenses of the division, and costs associated with
approved public safety communications projects, and to establish
reserves. The director, at his or her discretion, may establish
segregated, dedicated accounts within the fund.

(c) The fund shall consist of all of the following:

(1) Revenues from the provision or sale of public safety
communications services provided for in this chapter or of other
services rendered by the division.

(2) Moneys appropriated and made available by the Legislature
for the purposes of this chapter.

(3) Any other moneys properly credited or made available to
the division from any other source, including, but not limited to,
the return from investments of moneys by the Treasurer.

(d) Pursuant to Section 11255, the Controller shall, at the
request of the division and consistent with the annual budget of
each state department, transfer to the fund any payment authorized
to be collected by the division from public agencies for the
division’s services. The division shall notify each affected state
agency upon requesting the Controller to make any transfer
pursuant to this subdivision.

(e) If the balance remaining in the fund at the end of any fiscal
year exceeds 25 percent of the portion of the division’s budget for
that fiscal year that is used for supporting public safety
communications and other client services, the excess amount shall
be used to reduce the billing rates for services rendered by the
office during the following fiscal year.

(f) This section shall become operative on July 1, 2016.

end insert

begin insert

begin insert SEC. 65. end insert   

end insert

begin insert Chapter 6.45 (commencing with Section 30035) is
added to Division 3 of Title 3 of the end insert begin insert Government Code end insert begin insert , end insert immediately
preceding Chapter 7 begin insert , to read: end insert

begin insert

 

Chapter   begin insert 6.45. end insert Community-Based Transitional Housing
Program

 

begin insert 30035. end insert   

The Legislature finds and declares all of the following:

(a) Upon release from custody, offenders who are incarcerated
for felony or misdemeanor convictions generally return to their
communities of last residence.

(b) Providing released offenders with transitional housing
services in tandem with support services that include, but are not
limited to, employment counseling, job training, continuing
education, psychological counseling, and substance abuse
treatment may help these individuals transition into productive
roles in their communities and reduce the fiscal and operational
strain of recidivism on state and local law enforcement agencies
and the courts.

(c) Research has found that transitional housing, and related
support services, can be effective when provided to ex-offenders
in community-based settings that reflect the environments in which
they will permanently reside.

(d) For a variety of reasons, local agencies charged with land
use decisions may be reluctant to approve facilities that provide
released offenders with community-based services similar to those
described in subdivision (b).

(e) It is in the state’s interest to increase the supply of
transitional housing for ex-offenders. The provision of state grants
to cities, counties, and cities and counties that agree to approve
facilities that provide released offenders with community-based
services can provide incentives to increase the number of those
facilities, while also providing additional resources to those
communities.

begin insert 30035.1. end insert   

(a) There is hereby established the Community-Based
Transitional Housing Program, to be administered by the
Department of Finance. As used in this chapter, “program” means
the Community-Based Transitional Housing Program and
“department” means the Department of Finance.

(b) Eligibility to apply to participate in the program shall be
limited to cities, counties, and cities and counties.

(c) The program shall be funded with moneys appropriated for
that purpose in the annual Budget Act or other measure.
Notwithstanding any other law, the encumbrance period for moneys
appropriated in a budget act or other measure for the program
shall be three fiscal years.

begin insert 30035.2. end insert   

In order for a city, county, or city and county to
receive funds pursuant to the program, the facility for which it has
approved a conditional use permit or other local entitlement
pursuant to paragraph (2) of subdivision (a) of Section 30035.3
shall meet all of the following criteria:

(a) The facility shall provide transitional housing for a period
of not less than 10 years to persons who have been released from
a state prison or county jail after serving a sentence for one or
more felony or misdemeanor convictions.

(b) The facility shall provide, or contract with another provider
for, two or more additional services to residents. These services
may include, but need not necessarily be limited to, life skills
training, employment counseling, vocational training, continuing
education, psychological counseling, anger management training,
substance abuse treatment and counseling, or cognitive behavioral
therapy.

(c) The facility operator, and any entity with which it contracts
for the provisions of services described in subdivision (b), shall
be in valid possession of all licenses required by state law and
local rules, regulations, or ordinances.

begin insert 30035.3. end insert   

(a) (1) Applications for program funding shall be
submitted to the department, in the form and manner specified by
the department, no earlier than October 1, 2016, and no later than
October 1, 2018.

(2) (A) Each application shall be accompanied by a copy of a
resolution adopted by the county board of supervisors or the city
council, as applicable, stating that the board or council has
approved the issuance of a conditional use permit or other local
entitlement for a facility that meets the criteria specified in Section
30035.2 and that final issuance of the conditional use permit or
provision of other local entitlement will be provided within the
three scheduled public meetings of the county board of supervisors
or city council, as applicable, following the department’s approval
of the city’s, county’s, or city and county’s application for program
funds.

(B) The conditional use permit or other local entitlement issued
pursuant to this paragraph shall be valid for a minimum period
of 10 years from the date of issuance.

(C) Failure of the city, county, or city and county to provide
final issuance of the conditional use permit or other local
entitlement within the three scheduled public meetings following
the department’s approval of the city’s, county’s, or city and
county’s application shall render the department’s approval of
that application void. The city, county, or city and county shall
thereafter be permanently ineligible to submit any future
application for funding under the program.

(b) Each application for program funding shall detail all of the
following:

(1) The amount of program funding requested.

(2) The number of offenders for whom the facility will provide
services.

(3) The types of offenders for whom the facility will provide
services.

(4) The types of services that the facility will provide to
offenders.

(5) The purposes for which the city, county, or city and county
will use the program funds for which it has applied.

(6) The purposes for which the facility will use program funds
provided to it by the applicant city, county, or city and county.

(7) (A) The facility operator’s past in-state experience with
operating facilities similar to those for which the application has
been submitted.

(B) The information required by this paragraph shall include
detailed information describing each instance in which the facility
operator was found to be in violation of any state law or local
rule, regulation, or ordinance, including any applicable state or
local licensing requirements.

(8) The facility operator’s program performance measurement
in reducing recidivism and assisting ex-offenders in transitioning
back into society.

(9) (A) A list of all permitted facilities within the applicant
city’s, county’s, or city and county’s jurisdiction that, in a
residential setting, provide transitional housing services,
psychological counseling, or cognitive behavioral therapy.

(B) The number of persons residing in each facility described
in subparagraph (A) and the types of services provided to those
residents.

(C) The number of persons residing in each facility described
in subparagraph (A) who are on probation or parole.

(10) An agreement, as a condition of receiving program funds,
that the applicant city, county, or city and county will allow the
conditional use permit or other local entitlement to remain valid
throughout the 10-year period for which the conditional use permit
or other local entitlement required pursuant to paragraph (2) of
subdivision (a) is valid.

(11) Two contact persons at the applicant city, county, or city
and county and two contact persons at the facility provider who
will be tasked with responding to questions regarding the facility
if the application for program funding is approved. The applicant
city, county, or city and county shall promptly notify the department
of any changes made to the contact information required by this
paragraph.

begin insert 30035.4. end insert   

(a) The department shall approve or deny each
application received pursuant to Section 30035.3 within 90 days
of receipt and, if the application is approved, shall determine the
amount of funding to be provided to each applicant city, county,
or city and county, subject to subdivision (a) of Section 30035.5.
The department’s decision to approve or deny an application and
the determination of the amount of funding to be provided shall
be final.

(b) The criteria specified in paragraphs (1) through (9),
inclusive, of subdivision (b) of Section 30035.3 shall be the primary
basis upon which the department determines whether to approve
or deny an application and the amount of funds to award to an
applicant city, county, or city and county. The department may
consider any other criteria it deems appropriate, provided that
any additional criteria are germane to making an award decision
and further the purposes of the program.

(c) The department shall encourage applicant cities, counties,
and cities and counties to match the requested program funds, to
the greatest extent possible, using local funds. In the event that
the department determines that, based on the criteria specified in
subdivision (b), two or more applications are equal in merit, the
department shall give priority to those applicant cities, counties,
or cities and counties that agree to provide the largest amount of
local matching funds proportionate to the amount of program
funds for which they have applied.

(d) If the department approves an application and receives
subsequent notification that the applicant city, county, or city and
county has provided final issuance of a conditional use permit or
other local entitlement as required by paragraph (2) of subdivision
(a) of Section 30035.3, the Director of Finance, or his or her
designee, shall direct the State Controller to remit to the applicant
city, county, or city and county the amount of program funding
approved by the department from those funds designated for that
purpose in any budget act or other measure.

begin insert 30035.5. end insert   

(a) The department shall award to a city, county, or
city and county, the application of which the department has
approved pursuant to Section 30035.4, up to two million dollars
($2,000,000). An applicant city, county, or city and county shall
specify in its application the amount for which they are applying,
as required by paragraph (1) of subdivision (b) of Section 30035.3.

(b) Of the funds provided to an applicant pursuant to this
section, 60 percent shall be retained by the city, county, or city
and county that provided the conditional use permit or other local
entitlement for the facility and 40 percent shall be provided by the
city, county, or city and county to the facility operator.

(1) A city, county, or city and county may use program funds,
and any matching funds provided pursuant to subdivision (c) of
Section 30035.4, for the following purposes:

(A) Discretionary law enforcement services, including efforts
to enhance public safety in the vicinity of the facility for which
program funding is provided.

(B) Community outreach efforts that seek to address the
concerns of residents and property owners within the one-quarter
mile radius of the facility for which program funding is provided.

(C) Any other community-based activities that the board of
supervisors or city council, as applicable, believes will contribute
to improved community relations regarding the facility for which
program funding is provided.

(2) Facility operators may use program funds provided by the
applicant city, county, or city and county for the following
purposes:

(A) Providing facility residents with the services specified in
the approved application for program funding.

(B) Enhancing the security of the facility and its premises.

(C) Community outreach and communications.

(D) Start-up costs for the operation of the facility.

(3) While the program is intended to primarily target offenders
released from state prison or county jail, nothing in this chapter
shall be construed as prohibiting the program from serving other
individuals in the community who may benefit from the program’s
services.

(c) No later than August 1, 2017, and each subsequent August
1 for which the program is in effect, each participating city, county,
or city and county shall report the following to the department in
the form and manner specified by the department:

(1) Program funds and matching funds received by the
participating city, county, or city and county.

(2) A description of the use of the program funds and matching
funds.

(3) A list of permitted facilities within the city’s, county’s, or
city and county’s jurisdiction.

(d) No later than August 1, 2017, and each subsequent August
1 for which the program is in effect, each facility operator receiving
program funds from a participating city, county, or city and county
shall report the following to the department in the form and manner
specified by the department:

(1) Program funds and matching funds received by the facility
operator.

(2) The number of ex-offenders currently receiving program
services.

(3) A description of the services provided.

(4) The number of ex-offenders who, over the course of the year
preceding the report, received treatment and transitioned back
into society.

(5) The facility operator’s program performance measurement
of recidivism reduction.

begin insert 30035.6. end insert   

(a) No later than November 1, 2017, and each
subsequent November 1 until November 1, 2020, the department
shall submit a report to the Joint Legislative Budget Committee
detailing all of the following for the preceding fiscal year:

(1) The number of applications for program funding received
by the department.

(2) The number of applications for program funding approved
and denied by the department.

(3) The name of each city, county, or city and county receiving
program funds and the number of ex-offenders for which each
recipient city, county, or city and county has received program
funds.

(4) The name of each city, county, or city and county whose
application for program funding was denied and the number of
ex-offenders for which each denied application requested program
funding.

(b) A report submitted pursuant to subdivision (a) shall be
submitted in compliance with Section 9795.

begin insert 30035.7. end insert   

(a) Of the amount appropriated in the annual Budget
Act or other measure for the program, the department’s Office of
State Audits and Evaluations may use up to five hundred thousand
dollars ($500,000) to conduct a review of the program to determine
its effectiveness in providing services to offenders released from
state prison or county jail.

(b) The department’s Office of State Audits and Evaluations
shall initiate its review of the program on July 1, 2018. The
department shall provide a copy of the review to the Joint
Legislative Budget Committee no later than May 1, 2019. The copy
of the review shall be submitted in compliance with Section 9795.

(c) Cities, counties, cities and counties, and facility operators
that receive program funds shall agree, as a condition of receiving
program funds, to cooperate fully with the review conducted
pursuant this section by the department’s Office of State Audits
and Evaluations.

begin insert 30035.8. end insert   

Any action by the department to adopt and update
instructions to any state or local agency for the purpose of carrying
out the department’s obligations pursuant to this chapter
constitutes a department action to adopt and update instructions
for the preparation, development, or administration of the state
budget pursuant to Section 11357 and is exempt from the
rulemaking provisions of the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2).

end insert

begin insert

begin insert SEC. 66. end insert   

end insert

begin insert Section 11362.769 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

11362.769.  

Indoor and outdoor medical begin delete marijuana end delete begin insert cannabis end insert
cultivation shall be conducted in accordance with state and local
begin delete laws related to land conversion, grading, electricity usage, water
usage, water quality, woodland and riparian habitat protection,
agricultural discharges, and similar matters. end delete begin insert laws. end insert State agencies,
including, but not limited to, the begin insert Department of Food and
Agriculture, the end insert State Board of Forestry and Fire Protection, the
Department of Fish and Wildlife, the State Water Resources
Control Board, the California regional water quality control boards,
and traditional state law enforcement agencies shall address
environmental impacts of medical begin delete marijuana end delete begin insert cannabis end insert cultivation
and shall coordinate, when appropriate, with cities and counties
and their law enforcement agencies in enforcement efforts.

begin insert

begin insert SEC. 67. end insert   

end insert

begin insert Section 11362.775 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

11362.775.  

(a) Subject to subdivision (b), qualified patients,
persons with valid identification cards, and the designated primary
caregivers of qualified patients and persons with identification
cards, who associate within the State of California in order
collectively or cooperatively to cultivate cannabis for medical
purposes, shall not solely on the basis of that fact be subject to
state criminal sanctions under Section 11357, 11358, 11359, 11360,
11366, 11366.5, or 11570.

(b) This section shall remain in effect only until one year after
the Bureau of Medical begin delete Marijuana end delete begin insert Cannabis end insert Regulation posts a
notice on its Internet Web site that the licensing authorities have
commenced issuing licenses pursuant to the Medical begin delete Marijuana end delete
begin insert Cannabis end insert Regulation and Safety Act (Chapter 3.5 (commencing
with Section 19300) of Division 8 of the Business and Professions
Code), and is repealed upon issuance of licenses.

begin insert

(c) This section is repealed on year after the date upon which
the notice is posted pursuant to subdivision (b).

end insert

begin insert

begin insert SEC. 68. end insert   

end insert

begin insert Section 11362.777 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

11362.777.  

(a) The Department of Food and Agriculture shall
establish a Medical Cannabis Cultivation Program to be
administered by the secretary and, except as specified in
subdivision (c), shall administer this section as it pertains to the
begin insert commercial end insert cultivation of medical begin delete marijuana. end delete begin insert cannabis. end insert For
purposes of this section and Chapter 3.5 (commencing with Section
19300) of Division 8 of the Business and Professions Code,
medical cannabis is an agricultural product.

(b) (1) A person or entity shall not cultivate medical begin delete marijuana end delete
begin insert cannabis end insert without first obtaining both of the following:

(A) A license, permit, or other entitlement, specifically
permitting cultivation pursuant to these provisions, from the city,
county, or city and county in which the cultivation will occur.

(B) A state license issued by the department pursuant to this
section.

(2) A person or entity shall not submit an application for a state
license begin delete issued by the department end delete pursuant to this section unless
that person or entity has received a license, permit, or other
entitlement, specifically permitting cultivation pursuant to these
provisions, from the city, county, or city and county in which the
cultivation will occur.

(3) A person or entity shall not submit an application for a state
license begin delete issued by the department end delete pursuant to this section if the
proposed cultivation of begin delete marijuana end delete begin insert cannabis end insert will violate the
provisions of any local ordinance or regulation, or if medical
begin delete marijuana end delete begin insert cannabis end insert is prohibited by the city, county, or city and
county in which the cultivation is proposed to occur, either
expressly or otherwise under principles of permissive zoning.

(c) (1) Except as otherwise specified in this subdivision, and
without limiting any other local regulation, a city, county, or city
and county, through its current or future land use regulations or
ordinance, may issue or deny a permit to cultivate medical
begin delete marijuana end delete begin insert cannabis end insert pursuant to this section. A city, county, or city
and county may inspect the intended cultivation site for suitability
before issuing a permit. After the city, county, or city and county
has approved a permit, the applicant shall apply for a state medical
begin delete marijuana end delete begin insert cannabis end insert cultivation license from the department. A
locally issued cultivation permit shall only become active upon
licensing by the department and receiving final local approval. A
person shall not cultivate medical begin delete marijuana end delete begin insert cannabis end insert before
obtaining both a permit from the city, county, or city and county
and a state medical begin delete marijuana end delete begin insert cannabis end insert cultivation license from
the department.

(2) A city, county, or city and county that issues or denies
conditional licenses to cultivate medical begin delete marijuana end delete begin insert cannabis end insert
pursuant to this section shall notify the department in a manner
prescribed by the secretary.

(3) A city, county, or city and county’s locally issued conditional
permit requirements must be at least as stringent as the
department’s state licensing requirements.

(d) (1) The secretary may prescribe, adopt, and enforce
regulations relating to the implementation, administration, and
enforcement of this part, including, but not limited to, applicant
requirements, collections, reporting, refunds, and appeals.

(2) The secretary may prescribe, adopt, and enforce any
emergency regulations as necessary to implement this part. Any
emergency regulation prescribed, adopted, or enforced pursuant
to this section shall be adopted in accordance with Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code, and, for purposes of that chapter,
including Section 11349.6 of the Government Code, the adoption
of the regulation is an emergency and shall be considered by the
Office of Administrative Law as necessary for the immediate
preservation of the public peace, health and safety, and general
welfare.

(3) The secretary may enter into a cooperative agreement with
a county agricultural commissioner to carry out the provisions of
this chapter, including, but not limited to, administration,
investigations, inspections, licensing and assistance pertaining to
the cultivation of medical begin delete marijuana. end delete begin insert cannabis. end insert Compensation
under the cooperative agreement shall be paid from assessments
and fees collected and deposited pursuant to this chapter and shall
provide reimbursement to the county agricultural commissioner
for associated costs.

(e) (1) The department, in consultation with, but not limited
to, the Bureau of Medical begin delete Marijuana end delete begin insert Cannabis end insert Regulation, the
State Water Resources Control Board, and the Department of Fish
and Wildlife, shall implement a unique identification program for
medical begin delete marijuana. end delete begin insert cannabis. end insert In implementing the program, the
department shall consider issues, including, but not limited to,
water use and environmental impacts. In implementing the
program, the department shall ensure begin delete that: end delete begin insert compliance with Section
19332.2 of the Business and Professions Code. end insert

begin delete

(A) Individual and cumulative effects of water diversion and
discharge associated with cultivation do not affect the instream
flows needed for fish spawning, migration, and rearing, and the
flows needed to maintain natural flow variability.

end delete begin delete

(B) Cultivation will not negatively impact springs, riparian
wetlands, and aquatic habitats.

end delete

(2) The department shall establish a program for the
identification of permitted medical begin delete marijuana end delete begin insert cannabis end insert plants at
a cultivation site during the cultivation period. The unique identifier
shall be attached at the base of each plant. A unique identifier,
such as, but not limited to, a zip tie, shall be issued for each medical
begin delete marijuana end delete begin insert cannabis end insert plant.

(A) Unique identifiers will only be issued to those persons
appropriately licensed by this section.

(B) Information associated with the assigned unique identifier
and licensee shall be included in the trace and track program
specified in Section 19335 of the Business and Professions Code.

(C) The department may charge a fee to cover the reasonable
costs of issuing the unique identifier and monitoring, tracking, and
inspecting each medical begin delete marijuana end delete begin insert cannabis end insert plant.

(D) The department may promulgate regulations to implement
this section.

(3) The department shall take adequate steps to establish
protections against fraudulent unique identifiers and limit illegal
diversion of unique identifiers to unlicensed persons.

(f) (1) A city, county, or city and county that issues or denies
begin delete licenses end delete begin insert licenses, permits, or other entitlements end insert to cultivate medical
begin delete marijuana end delete begin insert cannabis end insert pursuant to this section shall notify the
department in a manner prescribed by the secretary.

(2) Unique identifiers and associated identifying information
administered by a begin delete city or county end delete begin insert city, county, or city and county end insert
shall adhere to the requirements set by the department and be the
equivalent to those administered by the department.

(g) This section does not apply to a qualified patient cultivating
begin delete marijuana end delete begin insert cannabis end insert pursuant to Section 11362.5 if the area he or
she uses to cultivate begin delete marijuana end delete begin insert cannabis end insert does not exceed 100
square feet and he or she cultivates begin delete marijuana end delete begin insert cannabis end insert for his or
her personal medical use and does not sell, distribute, donate, or
provide begin delete marijuana end delete begin insert cannabis end insert to any other person or entity. This
section does not apply to a primary caregiver cultivating begin delete marijuana end delete
begin insert cannabis end insert pursuant to Section 11362.5 if the area he or she uses to
cultivate begin delete marijuana end delete begin insert cannabis end insert does not exceed 500 square feet and
he or she cultivates begin delete marijuana end delete begin insert cannabis end insert exclusively for the personal
medical use of no more than five specified qualified patients for
whom he or she is the primary caregiver within the meaning of
Section 11362.7 and does not receive remuneration for these
activities, except for compensation provided in full compliance
with subdivision (c) of Section 11362.765. For purposes of this
section, the area used to cultivate begin delete marijuana end delete begin insert cannabis end insert shall be
measured by the aggregate area of vegetative growth of live
begin delete marijuana end delete begin insert cannabis end insert plants on the premises. Exemption from the
requirements of this section does not limit or prevent a city, county,
or city and county from exercising its police authority under
Section 7 of Article XI of the California Constitution.

begin insert

begin insert SEC. 69. end insert   

end insert

begin insert Section 44559.11 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

44559.11.  

(a) It is the intent of the Legislature to ensure that
the state, through the authority, may make maximum, efficient use
of capital access programs enacted by all federal and state agencies,
as well as funding available from any governmental program whose
goals may be advanced by providing funding to the Capital Access
Loan Program.

(b) In furtherance of this intent, and notwithstanding any other
provision of this article, when the contributions required pursuant
to Section 44559.4 are entirely funded by a begin delete source end delete begin insert public or
quasi-public entity end insert other than the begin delete authority, end delete begin insert authority’s fee revenue
under Sections 44525 and 44548, end insert the authority may, by regulation
adopted pursuant to subdivision (b) of Section begin delete 44520, end delete begin insert 44520 or
subdivision (e) of Section 44559.14, end insert establish alternate provisions
as necessary to enable the authority to participate in the alternative
funding source begin delete program. end delete begin insert program, including implementing loan
loss reserve programs to benefit any individual person engaged
in qualifying activities in furtherance of the public or quasi-public
entity’s policy objectives in the state that require financing. end insert

begin insert

begin insert SEC. 70. end insert   

end insert

begin insert Section 44559.14 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 44559.14. end insert   

(a) (1) It is the intent of the Legislature in enacting
the act adding this section to create and fund a program to assist
residential property owners and small business owners in
seismically retrofitting residences and small businesses with a
priority on soft-story buildings and unreinforced brick and concrete
buildings. It is not the intent of the Legislature to assist the physical
expansion of small businesses and residences.

(2) The Legislature hereby establishes the California Seismic
Safety Capital Access Loan Program. The program shall cover
losses on qualified loans by participating lenders to qualified
residential property owners or qualified small businesses for
eligible projects, as specified under this section. The program shall
be administered by the California Pollution Control Financing
Authority and follow the terms and conditions for the Capital
Access Loan Program in this article with the additional program
requirements specified under this section.

(b) For purposes of this section, unless the context requires
otherwise, the following words and terms shall have the following
meanings:

(1) “Seismic retrofit construction” means alteration performed
on or after January 1, 2017, of a qualified building or its
components to substantially mitigate seismic damage. “Seismic
retrofit construction” includes, but is not limited to, all of the
following:

(A) Anchoring the structure to the foundation.

(B) Bracing cripple walls.

(C) Bracing hot water heaters.

(D) Installing automatic gas shutoff valves.

(E) Repairing or reinforcing the foundation to improve the
integrity of the foundation against seismic damage.

(F) Anchoring fuel storage.

(G) Installing an earthquake-resistant bracing system for
mobilehomes that are registered with the Department of Housing
and Community Development.

(2) “Eligible costs” means the costs paid or incurred on or after
January 1, 2017, for an eligible project, including any engineering
or architectural design work necessary to permit or complete the
eligible project less the amount of any grant provided by a public
entity for the eligible project. “Eligible costs” do not include costs
paid or incurred for any of the following:

(A) Maintenance, including abatement of deferred or inadequate
maintenance, and correction of violations unrelated to the seismic
retrofit construction.

(B) Repair, including repair of earthquake damage.

(C) Seismic retrofit construction required by local building
codes as a result of addition, repair, building relocation, or change
of use or occupancy.

(D) Other work or improvement required by local building or
planning codes as a result of the intended seismic retrofit
construction.

(E) Rent reductions or other associated compensation,
compliance actions, or other related coordination involving the
qualified residential property owner or qualified small business
and any other party, including a tenant, insurer, or lender.

(F) Replacement of existing building components, including
equipment, except as needed to complete the seismic retrofit
construction.

(G) Bracing or securing nonpermanent building contents.

(H) The offset of costs, reimbursements, or other costs
transferred from the qualified residential property owner or
qualified small business to others.

(3) “Eligible project” means seismic retrofit construction that
is necessary to ensure that the qualified building is capable of
substantially mitigating seismic damage, and the financing
necessary to pay eligible costs of the project.

(4) “Qualified building” means a building that is certified by
the appropriate local building code enforcement authority for the
jurisdiction in which the building is located as hazardous and in
danger of collapse in the event of a catastrophic earthquake.

(5) “Qualified loan” means a loan or portion of a loan as
defined in subdivision (j) of Section 44559.1, where the proceeds
of the loan or portion of the loan are limited to the eligible costs
for an eligible project under this program, and where the loan or
portion of the loan does not exceed two hundred fifty thousand
dollars ($250,000).

(6) “Qualified small business” means a business referred to in
subdivisions (i) and (m) of Section 44559.1 that owns and occupies,
or intends to occupy, a qualified building for the operation of the
business.

(7) “Qualified residential property owner” means either an
owner and occupant of a residential building that is a qualified
building or a qualified small business that owns one or more
residential buildings, including a multiunit housing building, that
is a qualified building.

(c) (1) The California Seismic Safety Capital Access Loan
Program Fund is established in the State Treasury and shall be
administered by the authority pursuant to Sections 44548 and
44549 for this program. For purposes of this section, the references
in Sections 44548 and 44549 to “small business” shall include
“qualified residential property owner,” as defined in this section.
Notwithstanding Section 13340 of the Government Code, all
moneys in the fund are continuously appropriated to the authority
for carrying out this section. The authority may divide the fund
into separate accounts. All moneys accruing to the authority
pursuant to this section from any source shall be deposited into
the fund.

(2) All moneys in the fund derived from any source shall be held
in trust for the life of this program, for program expenditures and
costs of administering this section, as follows:

(A) Program expenditures shall include both of the following:

(i) Contributions paid by the authority in support of qualified
loans.

(ii) Costs for a qualified expert to validate that the proceeds of
the loans are eligible costs, as defined under this section.

(iii) Reasonable costs to educate the small business community,
residential property owners, and participating lenders about the
program, including travel within the state.

(B) Administrative expenditures shall be limited to 5 percent of
the initial appropriation plus 5 percent of all moneys recaptured,
and shall include all of the following:

(i) Personnel costs.

(ii) Service and vending contracts, other than program
expenditures described in subparagraph (A), that are necessary
to carry out the program.

(iii) Other reasonable direct and indirect administrative costs.

(3) The authority may direct the Treasurer to invest moneys in
the fund that are not required for its current needs in the eligible
securities specified in Section 16430 of the Government Code as
the authority shall designate. The authority may direct the
Treasurer to deposit moneys in interest-bearing accounts in state
or national banks or other financial institutions having principal
offices located in the state. The authority may alternatively require
the transfer of moneys in the fund to the Surplus Money Investment
Fund for investment pursuant to Article 4 (commencing with
Section 16470) of Chapter 3 of Part 2 of Division 4 of Title 2 of
the Government Code. All interest or other increment resulting
from an investment or deposit shall be deposited into the fund,
notwithstanding Section 16305.7 of the Government Code. Moneys
in the fund shall not be subject to transfer to any other fund
pursuant to any provision of Part 2 (commencing with Section
16300) of Division 4 of Title 2 of the Government Code, excepting
the Surplus Money Investment Fund.

(d) The authority shall adopt regulations pursuant to Section
44520 to implement the program, including, but not limited to,
provisions to:

(1) Establish a new loss reserve account for each participating
lender enrolling loans in this program.

(2) Obtain a certification from each participating lender and
qualified small business or qualified residential property owner
upon enrollment of a qualified loan that the proceeds of the loan
will be used for the eligible costs of an eligible project.

(3) Contribute an additional incentive from the fund for each
loan enrolled for a qualified small business or qualified residential
property owner located in a severely affected community.

(4) Restrict the enrollment of a qualified loan in any other
Capital Access Loan Program for a qualified small business or
qualified residential property owner offered by the authority as
long as funds are available for this program.

(5) Limit the term of loss coverage for each qualified loan to
no more than 10 years.

(6) Recapture from the loss reserve account the authority’s
contribution for each enrolled loan upon the maturation of that
loan or after 10 years from the date of enrollment, whichever
happens first, to be deposited in the fund and applied to future
program and administrative expenditures.

(e) The authority may adopt regulations relating to residential
property owner or small business financing as emergency
regulations in accordance with Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code. For purposes of that Chapter 3.5, including Section 11349.6
of the Government Code, the adoption of the regulations shall be
considered by the Office of Administrative Law to be necessary
for the immediate preservation of the public peace, health and
safety, and general welfare. The regulations shall be repealed 180
days after their effective date, unless the adopting authority or
agency complies with that Chapter 3.5.

end insert

begin insert

begin insert SEC. 71. end insert   

end insert

begin insert Section 50800.5 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

50800.5.  

(a)  There is hereby created in the State Treasury the
Emergency Housing and Assistance Fund. Notwithstanding Section
13340 of the Government Code, all money in the fund is
continuously appropriated to the department to carry out the
purposes of this chapter. Any repayments, interest, or new
appropriations shall be deposited in the fund, notwithstanding
Section 16305.7 of the Government Code. Money in the fund shall
not be subject to transfer to any other fund pursuant to any
provision of Part 2 (commencing with Section 16300) of Division
4 of Title 2 of the Government Code, except to the Surplus Money
Investment Fund.

(b)  All moneys in the Emergency Housing and Assistance Fund,
created pursuant to Section 50800.5 as it existed prior to the
effective date of the act that adds this chapter, shall be transferred,
on the effective date of the act that adds this chapter, to the
Emergency Housing and Assistance Fund created by subdivision
(a).

(c)  The department may require the transfer of moneys in the
Emergency Housing and Assistance Fund to the Surplus Money
Investment Fund for investment pursuant to Article 4 (commencing
with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title
2 of the Government Code. All interest, dividends, and pecuniary
gains from these investments shall accrue to the Emergency
Housing and Assistance Fund, notwithstanding Section 16305.7
of the Government Code.

begin insert

(d) To the extent funds are made available by the Legislature,
moneys in the fund may be used for the purposes of Chapter 19
(commencing with Section 50899.1) of Part 2 of Division 31 of the
Health and Safety Code.

end insert

begin insert

begin insert SEC. 72. end insert   

end insert

begin insert Chapter 19 (commencing with Section 50899.1) is
added to Part 2 of Division 31 of the end insert begin insert Health and Safety Code end insert begin insert , to
read: end insert

begin insert

 

Chapter   begin insert 19. end insert California Emergency Solutions Grants
Program

 

begin insert 50899.1. end insert   

This chapter may be cited as the California
Emergency Solutions Grants Program.

begin insert 50899.2. end insert   

The California Emergency Solutions Grants Program
shall be administered by the California Department of Housing
and Community Development.

begin insert 50899.3. end insert   

The following definitions shall apply to all activities
conducted pursuant to this chapter:

(a) “Department” means the California Department of Housing
and Community Development.

(b) “Homelessness” means the same as defined by the United
States Department of Housing and Urban Development in the
federal Emergency Solutions Grants Program at Section 576.2 of
Title 24 of the Code of Federal Regulations.

(c) “Continuum of care” means the same as defined by the
United States Department of Housing and Urban Development at
Section 586.2 of Title 24 of the Code of Federal Regulations.

(d) “Continuum of care service area” means the entire
geographic area within the boundaries of a continuum of care.

(e) “Subrecipient” means an entity that enters into a written
agreement with the department to implement activities pursuant
to this chapter.

(f) “California ESG Regulations” means the regulations set
forth in Section 8400 and following of Title 25 of the California
Code of Regulations, pertaining to the administration of the
Federal Emergency Shelter Grants Program.

(g) “Federal ESG Program” means collectively the California
ESG Regulations and the federal laws in connection with which
the California ESG Regulations were adopted, including Title IV
of the McKinney-Vento Homeless Assistance Act (42 U.S.C. Secs.
11371-11378, incl.), and any amendments thereto, the Homeless
Emergency Assistance and Rapid Transition to Housing (HEARTH)
Act of 2009 (42 U.S.C. Secs. 11302-11304, incl. and 11360-11378,
incl.), and any amendments and any implementing federal
regulations thereto.

begin insert 50899.4. end insert   

Funding for the California Emergency Solutions
Grants Program shall be made available upon appropriation to
the department for the purpose of addressing the crisis of
homelessness in California. In furtherance of this purpose, the
department shall make grants to qualifying subrecipients
throughout the state to implement activities that address the needs
of homeless individuals and families and assist them to regain
stability in permanent housing as quickly as possible. Funded
activities may include without limitation activities eligible under
the Federal ESG Program, including (a) engaging homeless
individuals and families living on the street; (b) operating homeless
shelters and providing essential services to shelter residents; (c)
rapidly rehousing homeless individuals and families; and (d)
preventing families and individuals from becoming homeless. In
addition, the California Emergency Solutions Grants Program
may facilitate technical assistance activities to improve the capacity
of subrecipients and the continuum of care to end homelessness.

begin insert 50899.5. end insert   

Any moneys appropriated and made available for the
purposes of this chapter, and all moneys received by the
department pursuant to this chapter, shall be used for the purposes
of this chapter, including the administration of the California
Emergency Solutions Grants Program. The administrative expenses
of the department in administering the California Emergency
Solutions Grants Program shall not exceed 5 percent of the funds
appropriated for the purposes of this chapter. Notwithstanding
any other provision of law, the department may provide an
additional amount, not to exceed 5 percent of the moneys
appropriated and made available for the purposes of this chapter,
for technical assistance to subrecipients and continuums of care
to develop, implement, carry out, or improve implementation of
activities pursuant to this chapter. Notwithstanding any other
provision of law, the department may also allocate an amount, not
to exceed 5 percent of the funding provided to a subrecipient, for
the general administration costs of those subrecipients that are
cities, counties, or other political subdivisions of the State of
California, in furthering the purposes of this chapter.

begin insert 50899.6. end insert   

The California Emergency Solutions Grants Program
generally will be administered by the department in a manner
consistent with the Federal ESG Program. However, the
department may administer the California Emergency Solutions
Grants Program differently from the Federal ESG Program, and
include such modifications as the department may determine are
necessary to address the purposes of this chapter or to improve
the effectiveness or efficiency of the California Emergency
Solutions Grants Program, including but not limited to:

(a) The participation of all continuum of care service areas
within California, using a formula distribution that reflects the
entire continuum of care service area.

(b) The modification of formula factors in the Federal ESG
Program for use in the California Emergency Solutions Grants
Program.

begin insert 50899.7. end insert   

The department shall review, adopt, amend, and
repeal guidelines to implement this chapter. Any guidelines adopted
to implement this chapter shall not be subject to Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code. In the event of any inconsistency
between such guidelines or terms and the Federal ESG Program,
the guidelines shall prevail for the purposes of this chapter.

end insert

begin insert

begin insert SEC. 74. end insert   

end insert

begin insert Section 51341 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

51341.  

The Legislature finds and declares that:

(a) There is a continuing and urgent need to provide affordable
mortgage financing to meet the increasingly unfulfilled housing
needs of citizens of this begin delete state, (b) there end delete begin insert state. end insert

begin insert (b) end insert begin insert   end insert begin insert There end insert is a need to develop financial mechanisms to make
homes affordable to begin delete first-time homebuyers, (c) the end delete begin insert low- and
moderate-income buyers who intend to occupy the homes as their
primary residences. end insert

begin insert (c) end insert begin insert   end insert begin insert The end insert high cost of housing impedes the ability of California
employers to compete in the national marketplace for begin delete employees,
and (d), therefore, end delete begin insert employees. end insert

begin insert

(d) Affordable housing enhances the quality of life for California
residents and provides fuel for the state’s economic engine.

end insert begin insert

(e) Housing is a critical component of the California economy,
both as an income producing sector and a principal factor in
economic development.

end insert begin insert

(f) California’s housing crisis severely impacts families
struggling to provide safe, stable homes for their children to grow
and learn and the workers who are the backbone of many of the
state’s most important industries.

end insert begin insert

(g) The percentage of Californians able to purchase their own
homes continues to decline.

end insert begin insert

(h) There is a need to streamline the agency’s homeownership
assistance programs to make them more efficient and effective.

end insert

begin insert (i) end insert begin insert   end insert begin insert Therefore, end insert this chapter is enacted to make begin delete existing tax-exempt
and taxable bond financing for residential mortgages more
affordable to California’s first-time homebuyers. end delete begin insert home purchases
more affordable to low- and moderate-income Californians seeking
the opportunity to own and occupy their own homes. end insert

begin insert

begin insert SEC. 75. end insert   

end insert

begin insert Section 51342 of the end insert begin insert Health and Safety Code end insert begin insert is
repealed. end insert

begin delete

51342.  

This chapter shall be known and may be cited as the
Roberti-Greene Home Purchase Assistance Program.

end delete

begin insert

begin insert SEC. 76. end insert   

end insert

begin insert Section 51344 of the end insert begin insert Health and Safety Code end insert begin insert is
amended and renumbered to read: end insert

begin delete 51344. end delete

begin insert 51342. end insert   

begin insert (a) end insert begin insert   end insert There is hereby begin delete created end delete begin insert continued end insert in the State
Treasury a Home Purchase Assistance Fund. “Fund,” as used in
this chapter, means the Home Purchase Assistance Fund.
Notwithstanding begin delete the provisions of end delete Section 13340 of the
Government Code, all moneys in the fund are continuously
appropriated to the agency, without regard to fiscal years, for
expenditure pursuant to this chapter and defraying begin delete actual end delete
administrative costs of the agency. Notwithstanding begin delete the provisions
of end delete Section 16305.7 of the Government Code, any interest earned
or other increment derived from investments made from moneys
in the fund shall be deposited in the fund.

begin insert

(b) On and after July 1, 2016, all of the following shall apply:

end insert begin insert

(1) Any unobligated amounts remaining in any fund established
for the purposes of Chapter 9 (commencing with Section 51450)
or Chapter 11 (commencing with Section 51500), including, but
not limited to, the California Homebuyer’s Downpayment
Assistance Program, the School Facility Fee Program, and the
Extra Credit Teacher Program, shall be transferred to the Home
Purchase Assistance Fund for expenditure by the agency for the
purposes of this chapter.

end insert begin insert

(2) The agency shall have no obligation to continue
administering loan programs authorized by Chapter 9
(commencing with Section 51450) or Chapter 11 (commencing
with Section 51500).

end insert begin insert

(3) Notwithstanding Section 16305.7 of the Government Code,
any interest earned, or other increment derived, from investments
made from moneys transferred to the fund pursuant to paragraph
(1), and any loan receivables, repayments made, or other sums
accruing to the agency pursuant to Chapter 9 (commencing with
Section 51450) or Chapter 11 (commencing with Section 51500)
shall be deposited into the fund for expenditure by the agency for
the purposes of this chapter.

end insert

begin insert

begin insert SEC. 77. end insert   

end insert

begin insert Section 51345 of the end insert begin insert Health and Safety Code end insert begin insert is
amended and renumbered to read: end insert

begin delete 51345. end delete

begin insert 51343. end insert   

(a) The agency shall administer a home purchase
assistance program in accordance with this chapter. The purpose
of the home purchase assistance program is to assist begin delete first-time end delete begin insert low-
and moderate-income end insert homebuyers to begin delete utilize existing mortgage
financing available pursuant to this part or Division 4 (commencing
with Section 800) of the Military and Veterans Code with the
additional financial resources made available pursuant to Part 8
(commencing with Section 53130). end delete begin insert qualify for the purchase of
owner-occupied homes. The agency shall make assistance to
first-time homebuyers a priority use of these funds. end insert

(b)  begin delete Home purchase end delete begin insert Homeownership end insert assistance under this chapter
begin delete shall include, but not be end delete begin insert may be provided for any purposes
authorized under Section 51402, including, but not end insert limited begin delete to: (1)
an end delete begin insert to, all of the following: end insert

begin insert (1) end insert begin insert   end insert begin insert An end insert interest rate subsidy to reduce the interest begin delete rate, (2) a end delete begin insert rate. end insert

begin insert (2) end insert begin insert   end insert begin insert A end insert deferred-payment, low-interest, begin delete second-mortgage loan to
reduce the principal and interest payments, and (3) end delete begin insert subordinate
mortgage loan, including end insert downpayment begin delete assistance end delete begin insert assistance,
closing cost assistance, or both, end insert to make financing affordable to
begin delete first-time end delete begin insert low- and moderate-income end insert homebuyers.

begin insert

(3) Buying down the cost of mortgage insurance.

end insert begin delete

(c) In no case shall the interest rate subsidy reduce the effective
interest rate to the borrower below 3 percent per annum, nor shall
the deferred-payment, low-interest, second mortgage loan exceed
49 percent of the total debt financing necessary to purchase the
home.

end delete begin delete

(d)

end delete

begin insert (c) end insert  The amount of home purchase assistance shall be begin delete a second end delete
begin insert available only in conjunction with first end insert mortgage loan begin delete secured by
a deed of trust of second priority to the primary end delete financing provided
by the agency or the Department of Veterans Affairs. begin delete The end delete

begin insert (d) end insert begin insert   end insert begin insert The end insert term of the home purchase assistance shall not exceed
the term of the primary loan.

begin insert

(e) Assistance under this chapter is available only for
owner-occupied residential structures.

end insert begin delete

(e)

end delete

begin insert (f) end insert  (1) The agency may, in its discretion, permit begin insert the lien of end insert the
downpayment assistance loan to be subordinated to refinancing if
it determines that begin delete the end delete begin insert one of the following applies: end insert

begin insert (A) end insert begin insert   end insert begin insert The end insert borrower has demonstrated begin delete hardship, end delete begin insert hardship and end insert
subordination is required to avoid begin delete foreclosure, and the end delete begin insert foreclosure. end insert

begin insert

(B) The borrower has acquired subordinate financing to build
an accessory dwelling on the property.

end insert begin insert

(C) The borrower has acquired subordinate financing to make
the property compliant with the federal Americans with Disabilities
Act of 1990 (Public Law 101-336), facilitate rehabilitation needed
to allow the owner to age in place, or both.

end insert

begin insert (D) end insert begin insert   end insert begin insert The end insert new loan meets the agency’s underwriting requirements.

begin delete The end delete

begin insert (2) end insert begin insert   end insert begin insert The end insert agency may permit subordination on those terms and
conditions as it determines are begin delete reasonable, but subordination is
not permitted if the borrower has sufficient equity to repay the
loan. end delete begin insert reasonable. end insert

begin delete

(2)

end delete

begin insert (3) end insert  The amount of home purchase assistance shall not be due
and payable upon the sale of the home if the first mortgage loan
is insured by the Federal Housing Administration (FHA) or if the
first mortgage loan is, or has been, transferred to the FHA, or if
the requirement is otherwise contrary to the regulations of the
United States Department of Housing and Urban Development
governing FHA insured first mortgage loans.

begin delete

(f)

end delete

begin insert (g) end insert  All repayments shall be deposited in the begin delete fund. end delete begin insert fund for
ongoing use in this downpayment assistance program. end insert

begin insert

begin insert SEC. 78. end insert   

end insert

begin insert Section 51347 of the end insert begin insert Health and Safety Code end insert begin insert is
repealed. end insert

begin delete

51347.  

The agency may provide mortgage insurance for the
home purchase assistance provided pursuant to this chapter and
may use not more than 15 percent of the moneys provided for
purposes of this chapter for mortgage insurance.

end delete

begin insert

begin insert SEC. 79. end insert   

end insert

begin insert Section 51348 of the end insert begin insert Health and Safety Code end insert begin insert is
repealed. end insert

begin delete

51348.  

It is the intent of the Legislature that no more than 50
percent of the home purchase assistance provided under this chapter
shall be for the purchase of homes that have not been previously
occupied.

end delete

begin insert

begin insert SEC. 80. end insert   

end insert

begin insert Section 51349 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

51349.  

(a) The agency shall have all the powers conferred
upon it by this part and Part 4 (commencing with Section 51600)
in administering this chapter.

(b) The authority provided by this section shall be conferred
upon the Department of Veterans Affairs by any contract executed
pursuant to Section 51346, with respect to the assistance being
provided pursuant to the contract.

begin insert

(c) Notwithstanding any other law, the agency, pursuant to the
objectives specified in Section 50952, may, with its own funds or
from funds derived from other sources, create its own home
purchase assistance programs, home purchase assistance products,
or both, on such terms and conditions as the agency deems prudent.
Nothing in this chapter shall be deemed to prohibit the agency
from exercising its discretion pursuant to this subdivision.

end insert

begin insert

begin insert SEC. 81. end insert   

end insert

begin insert Section 51455 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

51455.  

(a) Except as provided in subdivision (b), Sections
51450, 51451, 51452, and 51454 shall not be operative on and
after January 1, 2002.

(b) Except as provided in Section 51453 and 51453.5, begin insert until July
1, 2016, end insert the School Facilities Fee Assistance Fund established by
Section 51452 and the programmatic authority necessary to operate
the programs authorized by Section 51451 shall continue on and
after January 1, 2002, only with respect to any repayment
obligation pertaining to that assistance or to any regulatory
agreement imposed as a condition of that assistance.

begin insert

(c) Sections 51451.5, 51453, and 51453.5 shall not be operative
on and after July 1, 2016.

end insert begin insert

(d) On and after July 1, 2016, any unobligated amounts
remaining in the School Facilities Fee Assistance Fund, including
the repayment of disbursed moneys, or any interest earned from
the investment of those moneys or any other moneys accruing to
the fund from any source, shall be transferred to the Home
Purchase Assistance Fund and are continuously appropriated to
the agency for the purposes described in Section 51342.

end insert

begin insert

begin insert SEC. 82. end insert   

end insert

begin insert Section 51511 is added to the end insert begin insert Health and Safety Code end insert begin insert ,
to read: end insert

begin insert

begin insert 51511. end insert   

(a) This chapter, except for this section, shall not be
operative on and after July 1, 2016.

(b) On and after July 1, 2016, any unobligated amounts
remaining in any fund established for the purposes of this chapter,
including the repayment of disbursed moneys, or any interest
earned from the investment of those moneys or any other moneys
accruing to the fund from any source, shall be transferred to the
Home Purchase Assistance Fund and are continuously
appropriated to the agency for the purposes described in Section
51342.

end insert

begin insert

begin insert SEC. 83. end insert   

end insert

begin insert Section 51618 of the end insert begin insert Health and Safety Code end insert begin insert is
repealed. end insert

begin delete

51618.  

There shall be within the agency a Director of Insurance
of the fund, appointed by the Governor and serving at the pleasure
of the executive director. The Director of Insurance of the fund
shall demonstrate knowledge of, and expertise in, mortgage
insurance. The Director of Insurance of the fund shall manage and
conduct the business and affairs of the insurance fund under the
direction and supervision of the agency, and shall perform any
other duties as the executive director prescribes.

end delete

begin insert

begin insert SEC. 84. end insert   

end insert

begin insert Section 51619 of the end insert begin insert Health and Safety Code end insert begin insert is
repealed. end insert

begin delete

51619.  

The agency may delegate to the Director of Insurance
of the fund, under the resolutions of the board and subject to the
conditions as it from time to time prescribes, any power, function,
or duty conferred by law on the agency in connection with the
administration, management, and conduct of the business and
affairs of the insurance fund. The Director of Insurance may
exercise the powers and functions and perform the duties with the
same force and effect as the executive director, but subject to his
or her approval.

end delete

begin insert

begin insert SEC. 85. end insert   

end insert

begin insert Section 51622 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

51622.  

(a)  The agency may contract with any private person
or public agency for review of the administration of this part and
for assistance in implementing this part.

(b)  The agency shall prepare a biennial report on the condition
of the program of loan and bond insurance authorized by this part.
The report of the evaluation shall include an evaluation of program
effectiveness in relation to cost and shall include recommendations
and suggested legislation for the improvement of the program, if
any. The agency shall obtain an annual begin delete audit end delete begin insert agreed end insert begin insert -upon
procedures engagement end insert of the insurance fund’s books and accounts
with respect to its activities under this part to be made at least once
for each calendar year by an independent certified public
accountant. A copy of the annual begin delete audit end delete begin insert agreed end insert begin insert -upon procedures
engagement end insert and biennial report shall be transmitted to the
Governor, to the chairperson and vice-chairperson of the Senate
and Assembly housing policy committees, the Senate and
Assembly budget committees, and the Joint Legislative Budget
Committee, and made available for review by interested parties
no later than November 1 of each year for the annual begin delete audit, end delete
begin insert agreed end insert begin insert -upon procedures engagement end insert and November 1 biennially
for the program evaluation report.

begin insert

(c) For purposes of this section, the agreed-upon procedures
engagement shall be conducted in accordance with the Statements
on Standards for Attestation Engagements Number 10, as issued
by the American Institute of Certified Public Accountants.

end insert

begin insert

begin insert SEC. 86. end insert   

end insert

begin insert Section 12206 of the end insert begin insert Revenue and Taxation Code end insert begin insert is
amended to read: end insert

12206.  

(a) (1) There shall be allowed as a credit against the
begin delete “tax” (as end delete begin insert “tax,” end insert described by Section begin delete 12201) end delete begin insert 12201, end insert a state
low-income housing tax credit in an amount equal to the amount
determined in subdivision (c), computed in accordance with Section
42 of the Internal Revenue Code, begin insert relating to low-income housing
credit, end insert except as otherwise provided in this section.

(2) “Taxpayer,” for purposes of this section, means the sole
owner in the case of a “C” corporation, the partners in the case of
a partnership, and the shareholders in the case of an “S”
corporation.

(3) “Housing sponsor,” for purposes of this section, means the
sole owner in the case of a “C” corporation, the partnership in the
case of a partnership, and the “S” corporation in the case of an “S”
corporation.

(b) (1) The amount of the credit allocated to any housing
sponsor shall be authorized by the California Tax Credit Allocation
Committee, or any successor thereof, based on a project’s need
for the credit for economic feasibility in accordance with the
requirements of this section.

(A) Except for projects to provide farmworker housing, as
defined in subdivision (h) of Section 50199.7 of the Health and
Safety Code, that are allocated credits solely under the set-aside
described in subdivision (c) of Section 50199.20 of the Health and
Safety Code, the low-income housing project shall be located in
California and shall meet either of the following requirements:

(i) The project’s housing sponsor begin delete shall have end delete begin insert has end insert been allocated
by the California Tax Credit Allocation Committee a credit for
federal income tax purposes under Section 42 of the Internal
Revenue begin delete Code. end delete begin insert Code, relating to low-income housing credit. end insert

(ii) It begin delete shall qualify end delete begin insert qualifies end insert for a credit under Section
42(h)(4)(B) of the Internal Revenue begin delete Code. end delete begin insert Code, relating to special
rule where 50 percent or more of building is financed with
tax-exempt bonds subject to volume cap. end insert

(B) The California Tax Credit Allocation Committee shall not
require fees for the credit under this section in addition to those
fees required for applications for the tax credit pursuant to Section
42 of the Internal Revenue begin delete Code. end delete begin insert Code, relating to low-income
housing credit. end insert The committee may require a fee if the application
for the credit under this section is submitted in a calendar year
after the year the application is submitted for the federal tax credit.

(C) (i) For a project that receives a preliminary reservation of
the state low-income housing tax credit, allowed pursuant to
subdivision (a), on or after January 1, 2009, and before January 1,
begin delete 2016, end delete begin insert 2020, end insert the credit shall be allocated to the partners of a
partnership owning the project in accordance with the partnership
agreement, regardless of how the federal low-income housing tax
credit with respect to the project is allocated to the partners, or
whether the allocation of the credit under the terms of the
agreement has substantial economic effect, within the meaning of
Section 704(b) of the Internal Revenue begin delete Code. end delete begin insert Code, relating to
determination of distributive share. end insert

(ii) This subparagraph begin delete shall end delete begin insert does end insert not apply to a project that
receives a preliminary reservation of state low-income housing
tax credits under the set-aside described in subdivision (c) of
Section 50199.20 of the Health and Safety Code unless the project
also receives a preliminary reservation of federal low-income
housing tax credits.

begin delete

(iii) This subparagraph shall cease to be operative with respect
to any project that receives a preliminary reservation of a credit
on or after January 1, 2016.

end delete

(2) (A) The California Tax Credit Allocation Committee shall
certify to the housing sponsor the amount of tax credit under this
section allocated to the housing sponsor for each credit period.

(B) In the case of a partnership or an “S” corporation, the
housing sponsor shall provide a copy of the California Tax Credit
Allocation Committee certification to the taxpayer.

(C) The taxpayer shall attach a copy of the certification to any
return upon which a tax credit is claimed under this section.

(D) In the case of a failure to attach a copy of the certification
for the year to the return in which a tax credit is claimed under this
section, no credit under this section shall be allowed for that year
until a copy of that certification is provided.

(E) All elections made by the taxpayer pursuant to Section 42
of the Internal Revenue begin delete Code end delete begin insert Code, relating to low-income housing
credit, end insert shall apply to this section.

(F) (i) Except as described in clause (ii), for buildings located
in designated difficult development areas (DDAs) or qualified
census tracts (QCTs), as defined in Section 42(d)(5)(B) of the
Internal Revenue Code, begin insert relating to increase in credit for buildings
in high-cost areas, end insert credits may be allocated under this section in
the amounts prescribed in subdivision (c), provided that the amount
of credit allocated under Section 42 of the Internal Revenue begin delete Code end delete
begin insert Code, relating to low-income housing credit, end insert is computed on 100
percent of the qualified basis of the building.

(ii) Notwithstanding clause (i), the California Tax Credit
Allocation Committee may allocate the credit for buildings located
in DDAs or QCTs that are restricted to having 50 percent of its
occupants be special needs households, as defined in the California
Code of Regulations by the California Tax Credit Allocation
Committee, even if the taxpayer receives federal credits pursuant
to Section 42(d)(5)(B) of the Internal Revenue Code, begin insert relating to
increase in credit for buildings in high-cost areas, end insert provided that
the credit allowed under this section shall not exceed 30 percent
of the eligible basis of the building.

(G) (i) The California Tax Credit Allocation Committee may
allocate a credit under this section in exchange for a credit allocated
pursuant to Section 42(d)(5)(B) of the Internal Revenue begin delete Code end delete
begin insert Code, relating to increase in credit for buildings in high-cost areas, end insert
in amounts up to 30 percent of the eligible basis of a building if
the credits allowed under Section 42 of the Internal Revenue begin delete Code end delete
begin insert Code, relating to low-income housing credit, end insert are reduced by an
equivalent amount.

(ii) An equivalent amount shall be determined by the California
Tax Credit Allocation Committee based upon the relative amount
required to produce an equivalent state tax credit to the taxpayer.

(c) Section 42(b) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to applicable percentage: 70 percent present value credit for
certain new buildings; 30 percent present value credit for certain
other buildings, end insert shall be modified as follows:

(1) In the case of any qualified low-income building that receives
an allocation after 1989 and is a new building not federally
subsidized, the term “applicable percentage” means the following:

(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are not
federally subsidized for the taxable year, determined in accordance
with the requirements of Section 42(b)(2) of the Internal Revenue
Code, begin insert relating to temporary minimum credit rate for nonfederally
subsidized new buildings, end insert in lieu of the percentage prescribed in
Section 42(b)(1)(A) of the Internal Revenue Code.

(B) For the fourth year, the difference between 30 percent and
the sum of the applicable percentages for the first three years.

(2) In the case of any qualified low-income building that receives
an allocation after 1989 and that is a new building that is federally
subsidized or that is an existing building that is “at risk of
conversion,” the term “applicable percentage” means the following:

(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are federally
subsidized for the taxable year.

(B) For the fourth year, the difference between 13 percent and
the sum of the applicable percentages for the first three years.

(3) For purposes of this section, the term “at risk of conversion,”
with respect to an existing property means a property that satisfies
all of the following criteria:

(A) The property is a multifamily rental housing development
in which at least 50 percent of the units receive governmental
assistance pursuant to any of the following:

(i) New construction, substantial rehabilitation, moderate
rehabilitation, property disposition, and loan management set-aside
programs, or any other program providing project-based assistance
pursuant to Section 8 of the United States Housing Act of 1937,
Section 1437f of Title 42 of the United States Code, as amended.

(ii) The Below-Market-Interest-Rate Program pursuant to
Section 221(d)(3) of the National Housing Act, Sections
1715l(d)(3) and (5) of Title 12 of the United States Code.

(iii) Section 236 of the National Housing Act, Section 1715z-1
of Title 12 of the United States Code.

(iv) Programs for rent supplement assistance pursuant to Section
101 of the Housing and Urban Development Act of 1965, Section
1701s of Title 12 of the United States Code, as amended.

(v) Programs pursuant to Section 515 of the Housing Act of
1949, Section 1485 of Title 42 of the United States Code, as
amended.

(vi) The low-income housing credit program set forth in Section
42 of the Internal Revenue begin delete Code. end delete begin insert Code, relating to low-income
housing credit. end insert

(B) The restrictions on rent and income levels will terminate or
the begin delete federal end delete begin insert federally end insert insured mortgage on the property is eligible
for prepayment any time within five years before or after the date
of application to the California Tax Credit Allocation Committee.

(C) The entity acquiring the property enters into a regulatory
agreement that requires the property to be operated in accordance
with the requirements of this section for a period equal to the
greater of 55 years or the life of the property.

(D) The property satisfies the requirements of Section 42(e) of
the Internal Revenue begin delete Code regarding rehabilitation expenditures, end delete
begin insert Code, relating to rehabilitation expenditures treated as end insert begin insert separate
new building, end insert except that the provisions of Section
42(e)(3)(A)(ii)(I) shall not apply.

(d) The term “qualified low-income housing project” as defined
in Section 42(c)(2) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to qualified low-income building, end insert is modified by adding the
following requirements:

(1) The taxpayer shall be entitled to receive a cash distribution
from the operations of the project, after funding required reserves,
begin delete which, end delete begin insert that, end insert at the election of the taxpayer, is equal to:

(A) An amount not to exceed 8 percent of the lesser of:

(i) The owner begin delete equity end delete begin insert equity, end insert which shall include the amount of
the capital contributions actually paid to the housing sponsor and
shall not include any amounts until they are paid on an investor
note.

(ii) Twenty percent of the adjusted basis of the building as of
the close of the first taxable year of the credit period.

(B) The amount of the cashflow from those units in the building
that are not low-income units. For purposes of computing cashflow
under this subparagraph, operating costs shall be allocated to the
low-income units using the “floor space fraction,” as defined in
Section 42 of the Internal Revenue begin delete Code. end delete begin insert Code, relating to
low-income housing credit. end insert

(C) Any amount allowed to be distributed under subparagraph
(A) that is not available for distribution during the first five years
of the compliance period may begin delete accumulate and be end delete begin insert be accumulated
and end insert distributed any time during the first 15 years of the compliance
period but not thereafter.

(2) The limitation on return begin delete shall apply end delete begin insert applies end insert in the aggregate
to the partners if the housing sponsor is a partnership and in the
aggregate to the shareholders if the housing sponsor is an “S”
corporation.

(3) The housing sponsor shall apply any cash available for
distribution in excess of the amount eligible to be distributed under
paragraph (1) to reduce the rent on rent-restricted units or to
increase the number of rent-restricted units subject to the tests of
Section 42(g)(1) of the Internal Revenue begin delete Code. end delete begin insert Code, relating to
in general. end insert

(e) The provisions of Section 42(f) of the Internal Revenue begin delete Code end delete
begin insert Code, relating to definition and special rules relating to credit
period, end insert shall be modified as follows:

(1) The term “credit period” as defined in Section 42(f)(1) of
the Internal Revenue begin delete Code end delete begin insert Code, relating to credit period defined, end insert
is modified by substituting “four taxable years” for “10 taxable
years.”

(2) The special rule for the first taxable year of the credit period
under Section 42(f)(2) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to special rule for 1st year of credit period, end insert shall not apply to the
tax credit under this section.

(3) Section 42(f)(3) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to determination of applicable percentage with respect to increases
in qualified basis after 1st year of credit period, end insert is modified to
read:

If, as of the close of any taxable year in the compliance period,
after the first year of the credit period, the qualified basis of any
building exceeds the qualified basis of that building as of the close
of the first year of the credit period, the housing sponsor, to the
extent of its tax credit allocation, shall be eligible for a credit on
the excess in an amount equal to the applicable percentage
determined pursuant to subdivision (c) for the four-year period
beginning with the later of the taxable years in which the increase
in qualified basis occurs.

(f) The provisions of Section 42(h) of the Internal Revenue
begin delete Code end delete begin insert Code, relating to limitation on aggregate credit allowable
with respect to projects located in a state, end insert shall be modified as
follows:

(1) Section 42(h)(2) of the Internal Revenue begin delete Code shall not be
applicable and instead the following provisions shall be applicable: end delete

begin insert Code, relating to allocated credit amount to apply to all taxable
years ending during or after credit allocation year, does not apply
and instead the following provisions apply: end insert

The total amount for the four-year credit period of the housing
credit dollars allocated in a calendar year to any building shall
reduce the aggregate housing credit dollar amount of the California
Tax Credit Allocation Committee for the calendar year in which
the allocation is made.

(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)(I),
(7), and (8) of Section 42(h) of the Internal Revenue begin delete Code shall
not be applicable. end delete begin insert Code, relating to limitation on aggregate credit
allowable with respect to projects located in a state, do not apply
to this section. end insert

(g) The aggregate housing credit dollar amount that may be
allocated annually by the California Tax Credit Allocation
Committee pursuant to this section, Section 17058, and Section
23610.5 shall be an amount equal to the sum of all the following:

(1) Seventy million dollars ($70,000,000) for the 2001 calendar
year, and, for the 2002 calendar year and each calendar year
thereafter, seventy million dollars ($70,000,000) increased by the
percentage, if any, by which the Consumer Price Index for the
preceding calendar year exceeds the Consumer Price Index for the
2001 calendar year. For the purposes of this paragraph, the term
“Consumer Price Index” means the last Consumer Price Index for
All Urban Consumers published by the federal Department of
Labor.

(2) The unused housing credit ceiling, if any, for the preceding
calendar years.

(3) The amount of housing credit ceiling returned in the calendar
year. For purposes of this paragraph, the amount of housing credit
dollar amount returned in the calendar year equals the housing
credit dollar amount previously allocated to any project that does
not become a qualified low-income housing project within the
period required by this section or to any project with respect to
which an allocation is canceled by mutual consent of the California
Tax Credit Allocation Committee and the allocation recipient.

(4) Five hundred thousand dollars ($500,000) per calendar year
for projects to provide farmworker housing, as defined in
subdivision (h) of Section 50199.7 of the Health and Safety Code.

(5) The amount of any unallocated or returned credits under
former Sections 17053.14, 23608.2, and 23608.3, as those sections
read prior to January 1, 2009, until fully exhausted for projects to
provide farmworker housing, as defined in subdivision (h) of
Section 50199.7 of the Health and Safety Code.

(h) The term “compliance period” as defined in Section 42(i)(1)
of the Internal Revenue begin delete Code end delete begin insert Code, relating to compliance period, end insert
is modified to mean, with respect to any building, the period of 30
consecutive taxable years beginning with the first taxable year of
the credit period with respect thereto.

(i) (1) Section 42(j) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to recapture of credit, end insert shall not be applicable and the provisions
in paragraph (2) shall be substituted in its place.

(2) The requirements of this section shall be set forth in a
regulatory agreement between the California Tax Credit Allocation
Committee and the housing sponsor, begin delete which end delete begin insert and this end insert agreement
shall be subordinated, when required, to any lien or encumbrance
of any banks or other institutional lenders to the project. The
regulatory agreement entered into pursuant to subdivision (f) of
Section 50199.14 of the Health and Safety Code, shall apply,
begin delete providing end delete begin insert provided that end insert the agreement includes all of the following
provisions:

(A) A term not less than the compliance period.

(B) A requirement that the agreement be recorded in the official
records of the county in which the qualified low-income housing
project is located.

(C) A provision stating which state and local agencies can
enforce the regulatory agreement in the event the housing sponsor
fails to satisfy any of the requirements of this section.

(D) A provision that the regulatory agreement shall be deemed
a contract enforceable by tenants as third-party beneficiaries thereto
and begin delete which end delete begin insert that end insert allows individuals, whether prospective, present,
or former occupants of the building, who meet the income
limitation applicable to the building, the right to enforce the
regulatory agreement in any state court.

(E) A provision incorporating the requirements of Section 42
of the Internal Revenue begin delete Code end delete begin insert Code, relating to low-income housing
credit, end insert as modified by this section.

(F) A requirement that the housing sponsor notify the California
Tax Credit Allocation Committee or its designee and the local
agency that can enforce the regulatory agreement if there is a
determination by the Internal Revenue Service that the project is
not in compliance with Section 42(g) of the Internal Revenue begin delete Code. end delete

begin insert Code, relating to qualified low-income housing project. end insert

(G) A requirement that the housing sponsor, as security for the
performance of the housing sponsor’s obligations under the
regulatory agreement, assign the housing sponsor’s interest in rents
that it receives from the project, provided that until there is a
default under the regulatory agreement, the housing sponsor is
entitled to collect and retain the rents.

(H)  begin delete The end delete begin insert A provision that the end insert remedies available in the event of
a default under the regulatory agreement that is not cured within
a reasonable cure begin delete period, end delete begin insert period end insert include, but are not limited to,
allowing any of the parties designated to enforce the regulatory
agreement to collect all rents with respect to the project; taking
possession of the project and operating the project in accordance
with the regulatory agreement until the enforcer determines the
housing sponsor is in a position to operate the project in accordance
with the regulatory agreement; applying to any court for specific
performance; securing the appointment of a receiver to operate
the project; or any other relief as may be appropriate.

(j) (1) The committee shall allocate the housing credit on a
regular basis consisting of two or more periods in each calendar
year during which applications may be filed and considered. The
committee shall establish application filing deadlines, the maximum
percentage of federal and state low-income housing tax credit
ceiling that may be allocated by the committee in that period, and
the approximate date on which allocations shall be made. If the
enactment of federal or state law, the adoption of rules or
regulations, or other similar events prevent the use of two allocation
periods, the committee may reduce the number of periods and
adjust the filing deadlines, maximum percentage of credit allocated,
and the allocation dates.

(2) The committee shall adopt a qualified allocation plan, as
provided in Section 42(m)(1) of the Internal Revenue begin delete Code. end delete begin insert Code,
relating to plans for allocation of credit among projects. end insert In
adopting this plan, the committee shall comply with the provisions
of Sections 42(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue

begin delete Code. end delete begin insert Code, relating to qualified allocation plan and relating to
certain selection criteria must be used, respectively. end insert

(3) Notwithstanding Section 42(m) of the Internal Revenue
Code, begin insert relating to responsibilities of housing credit agencies, end insert the
California Tax Credit Allocation Committee shall allocate housing
credits in accordance with the qualified allocation plan and
regulations, which shall include the following provisions:

(A) All housing sponsors, as defined by paragraph (3) of
subdivision (a), shall demonstrate at the time the application is
filed with the committee that the project meets the following
threshold requirements:

(i) The housing sponsor shall demonstrate begin insert that end insert there is a need
and demand for low-income housing in the community or region
for which it is proposed.

(ii) The project’s proposed financing, including tax credit
proceeds, shall be sufficient to complete the project and that the
proposed operating income shall be adequate to operate the project
for the extended use period.

(iii) The project shall have enforceable financing commitments,
either construction or permanent financing, for at least 50 percent
of the total estimated financing of the project.

(iv) The housing sponsor shall have and maintain control of the
site for the project.

(v) The housing sponsor shall demonstrate that the project
complies with all applicable local land use and zoning ordinances.

(vi) The housing sponsor shall demonstrate that the project
development team has the experience and the financial capacity
to ensure project completion and operation for the extended use
period.

(vii) The housing sponsor shall demonstrate the amount of tax
credit that is necessary for the financial feasibility of the project
and its viability as a qualified low-income housing project
throughout the extended use period, taking into account operating
expenses, a supportable debt service, reserves, funds set aside for
rental begin delete subsidies, end delete begin insert subsidies end insert and required equity, and a development
fee that does not exceed a specified percentage of the eligible basis
of the project prior to inclusion of the development fee in the
eligible basis, as determined by the committee.

(B) The committee shall give a preference to those projects
satisfying all of the threshold requirements of subparagraph (A)
if both of the following apply:

(i) The project serves the lowest income tenants at rents
affordable to those tenants.

(ii) The project is obligated to serve qualified tenants for the
longest period.

(C) In addition to the provisions of subparagraphs (A) and (B),
the committee shall use the following criteria in allocating housing
credits:

(i) Projects serving large families in which a substantial number,
as defined by the committee, of all residential units begin delete is comprised
of end delete begin insert are end insert low-income units with three and more bedrooms.

(ii) Projects providing single-room occupancy units serving
very low income tenants.

(iii) Existing projects that are “at risk of conversion,” as defined
by paragraph (3) of subdivision (c).

(iv) Projects for which a public agency provides direct or indirect
long-term financial support for at least 15 percent of the total
project development costs or projects for which the owner’s equity
constitutes at least 30 percent of the total project development
costs.

(v) Projects that provide tenant amenities not generally available
to residents of low-income housing projects.

(4) For purposes of allocating credits pursuant to this section,
the committee shall not give preference to any project by virtue
of the date of submission of its application except to break a tie
when two or more of the projects have an equal rating.

(k) Section 42(l) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to certifications and other reports to secretary, end insert shall be modified
as follows:

The term “secretary” shall be replaced by the term begin delete “California
Franchise end delete begin insert “Franchise end insert Tax Board.”

(l) In the case begin delete where the state end delete begin insert in which the end insert credit allowed under
this section exceeds the “tax,” the excess may be carried over to
reduce the “tax” in the following year, and succeeding years if
necessary, until the credit has been exhausted.

(m) The provisions of Section 11407(a) of Public Law 101-508,
relating to the effective date of the extension of the low-income
housing credit, begin delete shall end delete apply to calendar years after 1993.

(n) The provisions of Section 11407(c) of Public Law 101-508,
relating to election to accelerate credit, begin delete shall end delete begin insert do end insert not apply.

begin insert

(o) (1) For a project that receives a preliminary reservation
under this section beginning on or after January 1, 2016, and
before January 1, 2020, a taxpayer may make an irrevocable
election in its application to the California Tax Credit Allocation
Committee to sell all or any portion of any credit allowed under
this section to one or more unrelated parties for each taxable year
in which the credit is allowed subject to both of the following
conditions:

end insert begin insert

(A) The credit is sold for consideration that is not less than 80
percent of the amount of the credit.

end insert begin insert

(B) The unrelated party or parties purchasing any or all of the
credit pursuant to this subdivision is a taxpayer allowed the credit
under this section for the taxable year of the purchase or any prior
taxable year or is a taxpayer allowed the federal credit under
Section 42 of the Internal Revenue Code, relating to low-income
housing credit, for the taxable year of the purchase or any prior
taxable year in connection with any project located in this state.
For purposes of this subparagraph, “taxpayer allowed the credit
under this section” means a taxpayer that is allowed the credit
under this section without regard to the purchase of a credit
pursuant to this subdivision.

end insert begin insert

(2) (A) The taxpayer that originally received the credit shall
report to the California Tax Credit Allocation Committee within
10 days of the sale of the credit, in the form and manner specified
by the California Tax Credit Allocation Committee, all required
information regarding the purchase and sale of the credit,
including the social security or other taxpayer identification
number of the unrelated party or parties to whom the credit has
been sold, the face amount of the credit sold, and the amount of
consideration received by the taxpayer for the sale of the credit.

end insert begin insert

(B) The California Tax Credit Allocation Committee shall
provide an annual listing to the Franchise Tax Board, in a form
and manner agreed upon by the California Tax Credit Allocation
Committee and the Franchise Tax Board, of the taxpayers that
have sold or purchased a credit pursuant to this subdivision.

end insert begin insert

(3) (A) A credit may be sold pursuant to this subdivision to
more than one unrelated party.

end insert begin insert

(B) (i) Except as provided in clause (ii), a credit shall not be
resold by the unrelated party to another taxpayer or other party.

end insert begin insert

(ii) All or any portion of any credit allowed under this section
may be resold once by an original purchaser to one or more
unrelated parties, subject to all of the requirements of this
subdivision.

end insert begin insert

(4) Notwithstanding any other law, the taxpayer that originally
received the credit that is sold pursuant to paragraph (1) shall
remain solely liable for all obligations and liabilities imposed on
the taxpayer by this section with respect to the credit, none of
which shall apply to a party to whom the credit has been sold or
subsequently transferred. Parties that purchase credits pursuant
to paragraph (1) shall be entitled to utilize the purchased credits
in the same manner in which the taxpayer that originally received
the credit could utilize them.

end insert begin insert

(5) A taxpayer shall not sell a credit allowed by this section if
the taxpayer was allowed the credit on any tax return of the
taxpayer.

end insert begin insert

(6) Notwithstanding paragraph (1), the taxpayer, with the
approval of the Executive Director of the California Tax Credit
Allocation Committee, may rescind the election to sell all or any
portion of the credit allowed under this section if the consideration
for the credit falls below 80 percent of the amount of the credit
after the California Tax Credit Allocation Committee reservation.

end insert begin insert

(p) The California Tax Credit Allocation Committee may
prescribe rules, guidelines, or procedures necessary or appropriate
to carry out the purposes of this section, including any guidelines
regarding the allocation of the credit allowed under this section.
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
3 of Title 2 of the Government Code shall not apply to any rule,
guideline, or procedure prescribed by the California Tax Credit
Allocation Committee pursuant to this section.

end insert begin delete

(o)

end delete

begin insert (q) end insert  This section shall remain in effect for as long as Section 42
of the Internal Revenue Code, relating to low-income housing
begin delete credits, end delete begin insert credit, end insert remains in effect.

begin insert

begin insert SEC. 87. end insert   

end insert

begin insert Section 17053.88.5 is added to the end insert begin insert Revenue and
Taxation Code end insert begin insert , to read: end insert

begin insert

begin insert 17053.88.5. end insert   

(a) In the case of a qualified taxpayer who donates
fresh fruits or fresh vegetables to a food bank located in California
under Chapter 5 (commencing with Section 58501) of Part 1 of
Division 21 of the Food and Agricultural Code, for taxable years
beginning on or after January 1, 2017, and before January 1,
2022, there shall be allowed as a credit against the “net tax,”
defined by Section 17039, an amount equal to 15 percent of the
qualified value of those fresh fruits or fresh vegetables.

(b) For purposes of this section:

(1) “Qualified taxpayer” means the person responsible for
planting a crop, managing the crop, and harvesting the crop from
the land.

(2) (A) “Qualified value” shall be calculated by using the
weighted average wholesale price based on the qualified taxpayer’s
total like grade wholesale sales of the donated item sold within
the calendar month of the qualified taxpayer’s donation.

(B) If no wholesale sales of the donated item have occurred in
the calendar month of the qualified taxpayer’s donation, the
“qualified value” shall be equal to the nearest regional wholesale
market price for the calendar month of the donation based upon
the same grade products as published by the United States
Department of Agriculture’s Agricultural Marketing Service or
its successor.

(c) If the credit allowed by this section is claimed by the
qualified taxpayer, any deduction otherwise allowed under this
part for that amount of the cost paid or incurred by the qualified
taxpayer that is eligible for the credit shall be reduced by the
amount of the credit provided in subdivision (a).

(d) The donor shall provide to the nonprofit organization the
qualified value of the donated fresh fruits or fresh vegetables and
information regarding the origin of where the donated fruits or
vegetables were grown, and upon receipt of the donated fresh
fruits or fresh vegetables, the nonprofit organization shall provide
a certificate to the donor. The certificate shall contain a statement
signed and dated by a person authorized by that organization that
the product is donated under Chapter 5 (commencing with Section
58501) of Part 1 of Division 21 of the Food and Agricultural Code.
The certificate shall also contain the type and quantity of product
donated, the name of donor or donors, the name and address of
the donee nonprofit organization, and, as provided by the donor,
the qualified value of the donated fresh fruits or fresh vegetables
and its origins. Upon the request of the Franchise Tax Board, the
qualified taxpayer shall provide a copy of the certification to the
Franchise Tax Board.

(e) The credit allowed by this section may be claimed only on
a timely filed original return.

(f) In the case where the credit allowed by this section exceeds
the “net tax,” the excess may be carried over to reduce the “net
tax” in the following year, and for the six succeeding years if
necessary, until the credit has been exhausted.

(g) In accordance with Section 41, the purpose of the credit is
to increase fresh fruits and vegetable donations to food banks.
Using the information available to the Franchise Tax Board from
the certificates required under subdivision (d) and subdivision (d)
of Section 23688.5, the Franchise Tax Board shall report to the
Legislature on or before December 1, 2019, and each December
1 thereafter until the inoperative date specified in subdivision (h),
regarding the utilization of the credit authorized by this section
and Section 23688.5. The Franchise Tax Board shall also include
in the report the qualified value of the fresh fruits and fresh
vegetables donated, the county in which the products originated,
and the month the donation was made.

(h) (1) A report required to be submitted pursuant to subdivision
(g) shall be submitted in compliance with Section 9795 of the
Government Code.

(2) The requirement for submitting a report imposed under
subdivision (g) is inoperative on January 1, 2021, pursuant to
Section 10231.5 of the Government Code.

(i) This section shall be repealed on December 1, 2022.

end insert

begin insert

begin insert SEC. 88. end insert   

end insert

begin insert Section 17058 of the end insert begin insert Revenue and Taxation Code end insert begin insert is
amended to read: end insert

17058.  

(a) (1) There shall be allowed as a credit against the
“net begin delete tax” (as end delete begin insert tax,” end insert defined begin delete in end delete begin insert by end insert Section begin delete 17039) end delete begin insert 17039, end insert a state
low-income housing begin insert tax end insert credit in an amount equal to the amount
determined in subdivision (c), computed in accordance with begin delete the
provisions of end delete Section 42 of the Internal Revenue Code, begin insert relating
to low-income housing credit, end insert except as otherwise provided in this
section.

(2)  begin delete “Taxpayer” end delete begin insert “Taxpayer,” end insert for purposes of this begin delete section end delete begin insert section, end insert
means the sole owner in the case of an individual, the partners in
the case of a partnership, and the shareholders in the case of an
“S” corporation.

(3) “Housing begin delete sponsor” end delete begin insert sponsor,” end insert for purposes of this begin delete section end delete
begin insert section, end insert means the sole owner in the case of an individual, the
partnership in the case of a partnership, and the “S” corporation
in the case of an “S” corporation.

(b) (1) The amount of the credit allocated to any housing
sponsor shall be authorized by the California Tax Credit Allocation
Committee, or any successor thereof, based on a project’s need
for the credit for economic feasibility in accordance with the
requirements of this section.

(A) The low-income housing project shall be located in
California and shall meet either of the following requirements:

(i) Except for projects to provide farmworker housing, as defined
in subdivision (h) of Section 50199.7 of the Health and Safety
Code, that are allocated credits solely under the set-aside described
in subdivision (c) of Section 50199.20 of the Health and Safety
Code, the project’s housing sponsor has been allocated by the
California Tax Credit Allocation Committee a credit for federal
income tax purposes under Section 42 of the Internal Revenue

begin delete Code. end delete begin insert Code, relating to low-income housing credit. end insert

(ii) It qualifies for a credit under Section 42(h)(4)(B) of the
Internal Revenue begin delete Code. end delete begin insert Code, relating to special rule where 50
percent or more of building is financed with tax-exempt bonds
subject to volume cap. end insert

(B) The California Tax Credit Allocation Committee shall not
require fees for the credit under this section in addition to those
fees required for applications for the tax credit pursuant to Section
42 of the Internal Revenue begin delete Code. end delete begin insert Code, relating to low-income
housing credit. end insert The committee may require a fee if the application
for the credit under this section is submitted in a calendar year
after the year the application is submitted for the federal tax credit.

(C) (i) For a project that receives a preliminary reservation of
the state low-income housing tax credit, allowed pursuant to
subdivision (a), on or after January 1, 2009, and before January 1,
begin delete 2016, end delete begin insert 2020, end insert the credit shall be allocated to the partners of a
partnership owning the project in accordance with the partnership
agreement, regardless of how the federal low-income housing tax
credit with respect to the project is allocated to the partners, or
whether the allocation of the credit under the terms of the
agreement has substantial economic effect, within the meaning of
Section 704(b) of the Internal Revenue begin delete Code. end delete begin insert Code, relating to
determination of distributive share. end insert

(ii) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or deduction
otherwise allowable under this part that is attributable to the sale
or other disposition of that partner’s partnership interest made prior
to the expiration of the federal credit shall not be allowed in the
taxable year in which the sale or other disposition occurs, but shall
instead be deferred until and treated as if it occurred in the first
taxable year immediately following the taxable year in which the
federal credit period expires for the project described in clause (i).

(iii) This subparagraph does not apply to a project that receives
a preliminary reservation of state low-income housing tax credits
under the set-aside described in subdivision (c) of Section 50199.20
of the Health and Safety Code unless the project also receives a
preliminary reservation of federal low-income housing tax credits.

begin delete

(iv) This subparagraph shall cease to be operative with respect
to any project that receives a preliminary reservation of a credit
on or after January 1, 2016.

end delete

(2) (A) The California Tax Credit Allocation Committee shall
certify to the housing sponsor the amount of tax credit under this
section allocated to the housing sponsor for each credit period.

(B) In the case of a partnership or an “S” corporation, the
housing sponsor shall provide a copy of the California Tax Credit
Allocation Committee certification to the taxpayer.

(C) The taxpayer shall, upon request, provide a copy of the
certification to the Franchise Tax Board.

(D) All elections made by the taxpayer pursuant to Section 42
of the Internal Revenue begin delete Code end delete begin insert Code, relating to low-income housing
credit, end insert apply to this section.

(E) (i) Except as described in clause (ii), for buildings located
in designated difficult development areas (DDAs) or qualified
census tracts (QCTs), as defined in Section 42(d)(5)(B) of the
Internal Revenue Code, begin insert relating to increase in credit for buildings
in high-cost areas, end insert credits may be allocated under this section in
the amounts prescribed in subdivision (c), provided that the amount
of credit allocated under Section 42 of the Internal Revenue begin delete Code end delete
begin insert Code, relating to low-income housing credit, end insert is computed on 100
percent of the qualified basis of the building.

(ii) Notwithstanding clause (i), the California Tax Credit
Allocation Committee may allocate the credit for buildings located
in DDAs or QCTs that are restricted to having 50 percent of its
occupants be special needs households, as defined in the California
Code of Regulations by the California Tax Credit Allocation
Committee, even if the taxpayer receives federal credits pursuant
to Section 42(d)(5)(B) of the Internal Revenue Code, begin insert relating to
increase in credit for buildings in high-cost areas, end insert provided that
the credit allowed under this section shall not exceed 30 percent
of the eligible basis of the building.

(F) (i) The California Tax Credit Allocation Committee may
allocate a credit under this section in exchange for a credit allocated
pursuant to Section 42(d)(5)(B) of the Internal Revenue begin delete Code end delete
begin insert Code, relating to increase in credit for buildings in high-cost areas, end insert
in amounts up to 30 percent of the eligible basis of a building if
the credits allowed under Section 42 of the Internal Revenue begin delete Code end delete
begin insert Code, relating to low-income housing credit, end insert are reduced by an
equivalent amount.

(ii) An equivalent amount shall be determined by the California
Tax Credit Allocation Committee based upon the relative amount
required to produce an equivalent state tax credit to the taxpayer.

(c) Section 42(b) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to applicable percentage: 70 percent present value credit for
certain new buildings; 30 percent present value credit for certain
other buildings, end insert shall be modified as follows:

(1) In the case of any qualified low-income building placed in
service by the housing sponsor during 1987, the term “applicable
percentage” means 9 percent for each of the first three years and
3 percent for the fourth year for new buildings (whether or not the
building is federally subsidized) and for existing buildings.

(2) In the case of any qualified low-income building that receives
an allocation after 1989 and is a new building not federally
subsidized, the term “applicable percentage” means the following:

(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are not
federally subsidized for the taxable year, determined in accordance
with the requirements of Section 42(b)(2) of the Internal Revenue
Code, begin insert relating to temporary minimum credit rate for nonfederally
subsidized new buildings, end insert in lieu of the percentage prescribed in
Section begin delete 42(b)(1)(B) end delete begin insert 42(b)(1)(A) end insert of the Internal Revenue Code.

(B) For the fourth year, the difference between 30 percent and
the sum of the applicable percentages for the first three years.

(3) In the case of any qualified low-income building that receives
an allocation after 1989 and that is a new building that is federally
subsidized or that is an existing building that is “at risk of
conversion,” the term “applicable percentage” means the following:

(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are federally
subsidized for the taxable year.

(B) For the fourth year, the difference between 13 percent and
the sum of the applicable percentages for the first three years.

(4) For purposes of this section, the term “at risk of conversion,”
with respect to an existing property means a property that satisfies
all of the following criteria:

(A) The property is a multifamily rental housing development
in which at least 50 percent of the units receive governmental
assistance pursuant to any of the following:

(i) New construction, substantial rehabilitation, moderate
rehabilitation, property disposition, and loan management set-aside
programs, or any other program providing project-based assistance
pursuant to Section 8 of the United States Housing Act of 1937,
Section 1437f of Title 42 of the United States Code, as amended.

(ii) The Below-Market-Interest-Rate Program pursuant to
Section 221(d)(3) of the National Housing Act, Sections
1715l(d)(3) and (5) of Title 12 of the United States Code.

(iii) Section 236 of the National Housing Act, Section 1715z-1
of Title 12 of the United States Code.

(iv) Programs for rent supplement assistance pursuant to Section
101 of the Housing and Urban Development Act of 1965, Section
1701s of Title 12 of the United States Code, as amended.

(v) Programs pursuant to Section 515 of the Housing Act of
1949, Section 1485 of Title 42 of the United States Code, as
amended.

(vi) The low-income housing credit program set forth in Section
42 of the Internal Revenue begin delete Code. end delete begin insert Code, relating to low-income
housing credit. end insert

(B) The restrictions on rent and income levels will terminate or
the begin delete federal end delete begin insert federally end insert insured mortgage on the property is eligible
for prepayment any time within five years before or after the date
of application to the California Tax Credit Allocation Committee.

(C) The entity acquiring the property enters into a regulatory
agreement that requires the property to be operated in accordance
with the requirements of this section for a period equal to the
greater of 55 years or the life of the property.

(D) The property satisfies the requirements of Section 42(e) of
the Internal Revenue begin delete Code regarding rehabilitation expenditures, end delete
begin insert Code, relating to rehabilitation expenditures treated as end insert begin insert separate
new building, end insert except that the provisions of Section
42(e)(3)(A)(ii)(I) begin delete do end delete begin insert shall end insert not apply.

(d) The term “qualified low-income housing project” as defined
in Section 42(c)(2) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to qualified low-income building, end insert is modified by adding the
following requirements:

(1) The taxpayer shall be entitled to receive a cash distribution
from the operations of the project, after funding required reserves,
that, at the election of the taxpayer, is equal to:

(A) An amount not to exceed 8 percent of the lesser of:

(i) The owner begin delete equity that end delete begin insert equity, which end insert shall include the amount
of the capital contributions actually paid to the housing sponsor
and shall not include any amounts until they are paid on an investor
note.

(ii) Twenty percent of the adjusted basis of the building as of
the close of the first taxable year of the credit period.

(B) The amount of the cashflow from those units in the building
that are not low-income units. For purposes of computing cashflow
under this subparagraph, operating costs shall be allocated to the
low-income units using the “floor space fraction,” as defined in
Section 42 of the Internal Revenue begin delete Code. end delete begin insert Code, relating to
low-income housing credit. end insert

(C) Any amount allowed to be distributed under subparagraph
(A) that is not available for distribution during the first five years
of the compliance period may be accumulated and distributed any
time during the first 15 years of the compliance period but not
thereafter.

(2) The limitation on return applies in the aggregate to the
partners if the housing sponsor is a partnership and in the aggregate
to the shareholders if the housing sponsor is an “S” corporation.

(3) The housing sponsor shall apply any cash available for
distribution in excess of the amount eligible to be distributed under
paragraph (1) to reduce the rent on rent-restricted units or to
increase the number of rent-restricted units subject to the tests of
Section 42(g)(1) of the Internal Revenue begin delete Code. end delete begin insert Code, relating to
in general. end insert

(e) The provisions of Section 42(f) of the Internal Revenue begin delete Code end delete
begin insert Code, relating to definition and special rules relating to credit
period, end insert shall be modified as follows:

(1) The term “credit period” as defined in Section 42(f)(1) of
the Internal Revenue begin delete Code end delete begin insert Code, relating to credit period defined, end insert
is modified by substituting “four taxable years” for “10 taxable
years.”

(2) The special rule for the first taxable year of the credit period
under Section 42(f)(2) of the Internal Revenue begin delete Code does end delete begin insert Code,
relating to special rules for 1st year of credit period, shall end insert not
apply to the tax credit under this section.

(3) Section 42(f)(3) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to determination of applicable percentage with respect to increases
in qualified basis after 1st year of credit period, end insert is modified to
read:

If, as of the close of any taxable year in the compliance period,
after the first year of the credit period, the qualified basis of any
building exceeds the qualified basis of that building as of the close
of the first year of the credit period, the housing sponsor, to the
extent of its tax credit allocation, shall be eligible for a credit on
the excess in an amount equal to the applicable percentage
determined pursuant to subdivision (c) for the four-year period
beginning with the taxable year in which the increase in qualified
basis occurs.

(f) The provisions of Section 42(h) of the Internal Revenue
begin delete Code end delete begin insert Code, relating to limitation on aggregate credit allowable
with respect to projects located in a state, end insert shall be modified as
follows:

(1) Section 42(h)(2) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to allocated credit amount to apply to all taxable years ending
during or after credit allocation year, end insert does not apply and instead
the following provisions apply:

The total amount for the four-year begin insert credit end insert period of the housing
credit dollars allocated in a calendar year to any building shall
reduce the aggregate housing credit dollar amount of the California
Tax Credit Allocation Committee for the calendar year in which
the allocation is made.

(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)(I),
(7), and (8) of Section 42(h) of the Internal Revenue begin delete Code end delete begin insert Code,
relating to limitation on aggregate credit allowable with respect
to projects located in a state, end insert do not apply to this section.

(g) The aggregate housing credit dollar amount that may be
allocated annually by the California Tax Credit Allocation
Committee pursuant to this section, Section 12206, and Section
23610.5 shall be an amount equal to the sum of all the following:

(1) Seventy million dollars ($70,000,000) for the 2001 calendar
year, and, for the 2002 calendar year and each calendar year
thereafter, seventy million dollars ($70,000,000) increased by the
percentage, if any, by which the Consumer Price Index for the
preceding calendar year exceeds the Consumer Price Index for the
2001 calendar year. For the purposes of this paragraph, the term
“Consumer Price Index” means the last Consumer Price Index for
All Urban Consumers published by the federal Department of
Labor.

(2) The unused housing credit ceiling, if any, for the preceding
calendar years.

(3) The amount of housing credit ceiling returned in the calendar
year. For purposes of this paragraph, the amount of housing credit
dollar amount returned in the calendar year equals the housing
credit dollar amount previously allocated to any project that does
not become a qualified low-income housing project within the
period required by this section or to any project with respect to
which an allocation is canceled by mutual consent of the California
Tax Credit Allocation Committee and the allocation recipient.

(4) Five hundred thousand dollars ($500,000) per calendar year
for projects to provide farmworker housing, as defined in
subdivision (h) of Section 50199.7 of the Health and Safety Code.

(5) The amount of any unallocated or returned credits under
former Sections 17053.14, 23608.2, and 23608.3, as those sections
read prior to January 1, 2009, until fully exhausted for projects to
provide farmworker housing, as defined in subdivision (h) of
Section 50199.7 of the Health and Safety Code.

(h) The term “compliance period” as defined in Section 42(i)(1)
of the Internal Revenue begin delete Code end delete begin insert Code, relating to compliance period, end insert
is modified to mean, with respect to any building, the period of 30
consecutive taxable years beginning with the first taxable year of
the credit period with respect thereto.

(i) Section 42(j) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to recapture of credit, end insert does not apply and the following
requirements of this section shall be set forth in a regulatory
agreement between the California Tax Credit Allocation Committee
and the housing sponsor, begin delete which end delete begin insert and this end insert agreement shall be
subordinated, when required, to any lien or encumbrance of any
banks or other institutional lenders to the project. The regulatory
agreement entered into pursuant to subdivision (f) of Section
50199.14 of the Health and Safety Code shall apply, provided that
the agreement includes all of the following provisions:

(1) A term not less than the compliance period.

(2) A requirement that the agreement be recorded in the official
records of the county in which the qualified low-income housing
project is located.

(3) A provision stating which state and local agencies can
enforce the regulatory agreement in the event the housing sponsor
fails to satisfy any of the requirements of this section.

(4) A provision that the regulatory agreement shall be deemed
a contract enforceable by tenants as third-party beneficiaries thereto
and that allows individuals, whether prospective, present, or former
occupants of the building, who meet the income limitation
applicable to the building, the right to enforce the regulatory
agreement in any state court.

(5) A provision incorporating the requirements of Section 42
of the Internal Revenue begin delete Code end delete begin insert Code, relating to low-income housing
credit, end insert as modified by this section.

(6) A requirement that the housing sponsor notify the California
Tax Credit Allocation Committee or its designee if there is a
determination by the Internal Revenue Service that the project is
not in compliance with Section 42(g) of the Internal Revenue begin delete Code. end delete

begin insert Code, relating to qualified low-income housing project. end insert

(7) A requirement that the housing sponsor, as security for the
performance of the housing sponsor’s obligations under the
regulatory agreement, assign the housing sponsor’s interest in rents
that it receives from the project, provided that until there is a
default under the regulatory agreement, the housing sponsor is
entitled to collect and retain the rents.

(8)  begin delete The end delete begin insert A provision that the end insert remedies available in the event of
a default under the regulatory agreement that is not cured within
a reasonable cure begin delete period, end delete begin insert period end insert include, but are not limited to,
allowing any of the parties designated to enforce the regulatory
agreement to collect all rents with respect to the project; taking
possession of the project and operating the project in accordance
with the regulatory agreement until the enforcer determines the
housing sponsor is in a position to operate the project in accordance
with the regulatory agreement; applying to any court for specific
performance; securing the appointment of a receiver to operate
the project; or any other relief as may be appropriate.

(j) (1) The committee shall allocate the housing credit on a
regular basis consisting of two or more periods in each calendar
year during which applications may be filed and considered. The
committee shall establish application filing deadlines, the maximum
percentage of federal and state low-income housing tax credit
ceiling that may be allocated by the committee in that period, and
the approximate date on which allocations shall be made. If the
enactment of federal or state law, the adoption of rules or
regulations, or other similar events prevent the use of two allocation
periods, the committee may reduce the number of periods and
adjust the filing deadlines, maximum percentage of credit allocated,
and the allocation dates.

(2) The committee shall adopt a qualified allocation plan, as
provided in Section 42(m)(1) of the Internal Revenue begin delete Code. end delete begin insert Code,
relating to plans for allocation of credit among projects. end insert In
adopting this plan, the committee shall comply with the provisions
of Sections 42(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue

begin delete Code. end delete begin insert Code, relating to qualified allocation plan and relating to
certain selection criteria must be used, respectively. end insert

(3) Notwithstanding Section 42(m) of the Internal Revenue
Code, begin insert relating to responsibilities of housing credit agencies, end insert the
California Tax Credit Allocation Committee shall allocate housing
credits in accordance with the qualified allocation plan and
regulations, which shall include the following provisions:

(A) All housing sponsors, as defined by paragraph (3) of
subdivision (a), shall demonstrate at the time the application is
filed with the committee that the project meets the following
threshold requirements:

(i) The housing sponsor shall demonstrate begin insert that end insert there is a need
and demand for low-income housing in the community or region
for which it is proposed.

(ii) The project’s proposed financing, including tax credit
proceeds, shall be sufficient to complete the project and that the
proposed operating income shall be adequate to operate the project
for the extended use period.

(iii) The project shall have enforceable financing commitments,
either construction or permanent financing, for at least 50 percent
of the total estimated financing of the project.

(iv) The housing sponsor shall have and maintain control of the
site for the project.

(v) The housing sponsor shall demonstrate that the project
complies with all applicable local land use and zoning ordinances.

(vi) The housing sponsor shall demonstrate that the project
development team has the experience and the financial capacity
to ensure project completion and operation for the extended use
period.

(vii) The housing sponsor shall demonstrate the amount of tax
credit that is necessary for the financial feasibility of the project
and its viability as a qualified low-income housing project
throughout the extended use period, taking into account operating
expenses, a supportable debt service, reserves, funds set aside for
rental subsidies and required equity, and a development fee that
does not exceed a specified percentage of the eligible basis of the
project prior to inclusion of the development fee in the eligible
basis, as determined by the committee.

(B) The committee shall give a preference to those projects
satisfying all of the threshold requirements of subparagraph (A)
if both of the following apply:

(i) The project serves the lowest income tenants at rents
affordable to those tenants.

(ii) The project is obligated to serve qualified tenants for the
longest period.

(C) In addition to the provisions of subparagraphs (A) and (B),
the committee shall use the following criteria in allocating housing
credits:

(i) Projects serving large families in which a substantial number,
as defined by the committee, of all residential units begin delete is comprised
of end delete begin insert are end insert low-income units with three and more bedrooms.

(ii) Projects providing single-room occupancy units serving
very low income tenants.

(iii) Existing projects that are “at risk of conversion,” as defined
by paragraph (4) of subdivision (c).

(iv) Projects for which a public agency provides direct or indirect
long-term financial support for at least 15 percent of the total
project development costs or projects for which the owner’s equity
constitutes at least 30 percent of the total project development
costs.

(v) Projects that provide tenant amenities not generally available
to residents of low-income housing projects.

(4) For purposes of allocating credits pursuant to this section,
the committee shall not give preference to any project by virtue
of the date of submission of its application.

(k) Section 42(l) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to certifications and other reports to secretary, end insert shall be modified
as follows:

The term “secretary” shall be replaced by the term begin delete “California
Franchise end delete begin insert “Franchise end insert Tax Board.”

(l) In the case in which the credit allowed under this section
exceeds the net tax, the excess begin delete credit end delete may be carried over to reduce
the net tax in the following year, and succeeding begin delete taxable end delete years, if
necessary, until the credit has been exhausted.

(m) A project that received an allocation of a 1989 federal
housing credit dollar amount shall be eligible to receive an
allocation of a 1990 state housing credit dollar amount, subject to
all of the following conditions:

(1) The project was not placed in service prior to 1990.

(2) To the extent the amendments made to this section by the
Statutes of 1990 conflict with any provisions existing in this section
prior to those amendments, the prior provisions of law shall prevail.

(3) Notwithstanding paragraph (2), a project applying for an
allocation under this subdivision is subject to the requirements of
paragraph (3) of subdivision (j).

(n) The credit period with respect to an allocation of credit in
1989 by the California Tax Credit Allocation Committee of which
any amount is attributable to unallocated credit from 1987 or 1988
shall not begin until after December 31, 1989.

(o) The provisions of Section 11407(a) of Public Law 101-508,
relating to the effective date of the extension of the low-income
housing credit, apply to calendar years after 1989.

(p) The provisions of Section 11407(c) of Public Law 101-508,
relating to election to accelerate credit, do not apply.

begin insert

(q) (1) For a project that receives a preliminary reservation
under this section beginning on or after January 1, 2016, and
before Janaury 1, 2020, a taxpayer may make an irrevocable
election in its application to the California Tax Credit Allocation
Committee to sell all or any portion of any credit allowed under
this section to one or more unrelated parties for each taxable year
in which the credit is allowed subject to both of the following
conditions:

end insert begin insert

(A) The credit is sold for consideration that is not less than 80
percent of the amount of the credit.

end insert begin insert

(B) The unrelated party or parties purchasing any or all of the
credit pursuant to this subdivision is a taxpayer allowed the credit
under this section for the taxable year of the purchase or any prior
taxable year or is a taxpayer allowed the federal credit under
Section 42 of the Internal Revenue Code, relating to low-income
housing credit, for the taxable year of the purchase or any prior
taxable year in connection with any project located in this state.
For purposes of this subparagraph, “taxpayer allowed the credit
under this section” means a taxpayer that is allowed the credit
under this section without regard to the purchase of a credit
pursuant to this subdivision.

end insert begin insert

(2) (A) The taxpayer that originally received the credit shall
report to the California Tax Credit Allocation Committee within
10 days of the sale of the credit, in the form and manner specified
by the California Tax Credit Allocation Committee, all required
information regarding the purchase and sale of the credit,
including the social security or other taxpayer identification
number of the unrelated party or parties to whom the credit has
been sold, the face amount of the credit sold, and the amount of
consideration received by the taxpayer for the sale of the credit.

end insert begin insert

(B) The California Tax Credit Allocation Committee shall
provide an annual listing to the Franchise Tax Board, in a form
and manner agreed upon by the California Tax Credit Allocation
Committee and the Franchise Tax Board, of the taxpayers that
have sold or purchased a credit pursuant to this subdivision.

end insert begin insert

(3) (A) A credit may be sold pursuant to this subdivision to
more than one unrelated party.

end insert begin insert

(B) (i) Except as provided in clause (ii), a credit shall not be
resold by the unrelated party to another taxpayer or other party.

end insert begin insert

(ii) All or any portion of any credit allowed under this section
may be resold once by an original purchaser to one or more
unrelated parties, subject to all of the requirements of this
subdivision.

end insert begin insert

(4) Notwithstanding any other law, the taxpayer that originally
received the credit that is sold pursuant to paragraph (1) shall
remain solely liable for all obligations and liabilities imposed on
the taxpayer by this section with respect to the credit, none of
which shall apply to a party to whom the credit has been sold or
subsequently transferred. Parties that purchase credits pursuant
to paragraph (1) shall be entitled to utilize the purchased credits
in the same manner in which the taxpayer that originally received
the credit could utilize them.

end insert begin insert

(5) A taxpayer shall not sell a credit allowed by this section if
the taxpayer was allowed the credit on any tax return of the
taxpayer.

end insert begin insert

(6) Notwithstanding paragraph (1), the taxpayer, with the
approval of the Executive Director of the California Tax Credit
Allocation Committee, may rescind the election to sell all or any
portion of the credit allowed under this section if the consideration
for the credit falls below 80 percent of the amount of the credit
after the California Tax Credit Allocation Committee reservation.

end insert begin insert

(r) The California Tax Credit Allocation Committee may
prescribe rules, guidelines, or procedures necessary or appropriate
to carry out the purposes of this section, including any guidelines
regarding the allocation of the credit allowed under this section.
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
3 of Title 2 of the Government Code shall not apply to any rule,
guideline, or procedure prescribed by the California Tax Credit
Allocation Committee pursuant to this section.

end insert begin delete

(q)

end delete

begin insert (s) end insert  The amendments to this section made by begin delete the act adding this
subdivision end delete begin insert Chapter 1222 of the Statutes of 1993 end insert apply only to
taxable years beginning on or after January 1, 1994.

begin delete

(r)

end delete

begin insert (t) end insert  This section shall remain in effect on and after December 1,
1990, for as long as Section 42 of the Internal Revenue Code,
relating to low-income housing begin delete credits, end delete begin insert credit, end insert remains in effect.
Any unused credit may continue to be carried forward, as provided
in subdivision (l), until the credit has been exhausted.

begin insert

begin insert SEC. 89. end insert   

end insert

begin insert Section 18900.24 of the end insert begin insert Revenue and Taxation Code end insert

begin insert is amended to read: end insert

18900.24.  

All money transferred to the Habitat for Humanity
Fund, upon appropriation by the Legislature, shall be allocated as
follows:

(a) To the Franchise Tax Board, the Controller, and the
Department of Housing and Community Development for
reimbursement of all costs incurred by the Franchise Tax Board,
the Controller, and the Department of Housing and Community
Development in connection with their duties under this article.

begin delete

(b) The Department of Housing and Community Development
for distribution of grants to Habitat for Humanity affiliates in
California that are in active status, as described on the Business
Search page of the Secretary of State’s Internet Web site, and that
are exempt from federal income taxation as an organization
described in Section 501(c)(3) of the Internal Revenue Code. The
Department of Housing and Community Development shall award
grants through a competitive, project-specific grant process and
be responsible for overseeing that grant program. A Habitat for
Humanity affiliate shall not use a grant award for administrative
expenses or for any purposes outside of California.

end delete begin insert

(b) (1) To the Department of Housing and Community
Development for disbursement to Habitat for Humanity of
California, Inc., a California nonprofit public benefit corporation
representing and supporting California Habitat for Humanity
affiliates as a state-support organization.

end insert begin insert

(2) Habitat for Humanity of California, Inc., shall submit a plan
to the Department of Housing and Community Development, within
60 calendar days of receiving a disbursement, for the use and
competitive project-specific distribution of moneys pursuant to
this article to Habitat for Humanity affiliates in California that
are in active status, as described on the Business Search page of
the Secretary of State’s Internet Web site, and that are exempt
from federal income taxation as an organization described in
Section 501(c)(3) of the Internal Revenue Code.

end insert begin insert

(c) Habitat for Humanity of California, Inc., shall not use more
than 5 percent of the moneys received pursuant to this article for
administrative expenses.

end insert begin insert

(d) A Habitat for Humanity affiliate shall not use the moneys
received pursuant to this article for administrative expenses or for
purposes outside of California.

end insert begin insert

(e) Habitat for Humanity of California, Inc., shall submit an
annual audit of the program to the Department of Housing and
Community Development within 60 calendar days of the completion
of the audit.

end insert

begin insert

begin insert SEC. 90. end insert   

end insert

begin insert Section 23610.5 of the end insert begin insert Revenue and Taxation Code end insert

begin insert is amended to read: end insert

23610.5.  

(a) (1) There shall be allowed as a credit against the
begin delete “tax” (as end delete begin insert “tax,” end insert defined by Section begin delete 23036) end delete begin insert 23036, end insert a state
low-income housing tax credit in an amount equal to the amount
determined in subdivision (c), computed in accordance with Section
42 of the Internal Revenue begin delete Code of 1986, end delete begin insert Code, relating to
low-income housing credit, end insert except as otherwise provided in this
section.

(2) “Taxpayer,” for purposes of this section, means the sole
owner in the case of a “C” corporation, the partners in the case of
a partnership, and the shareholders in the case of an “S”
corporation.

(3) “Housing sponsor,” for purposes of this section, means the
sole owner in the case of a “C” corporation, the partnership in the
case of a partnership, and the “S” corporation in the case of an “S”
corporation.

(b) (1) The amount of the credit allocated to any housing
sponsor shall be authorized by the California Tax Credit Allocation
Committee, or any successor thereof, based on a project’s need
for the credit for economic feasibility in accordance with the
requirements of this section.

(A) The low-income housing project shall be located in
California and shall meet either of the following requirements:

(i) Except for projects to provide farmworker housing, as defined
in subdivision (h) of Section 50199.7 of the Health and Safety
Code, that are allocated credits solely under the set-aside described
in subdivision (c) of Section 50199.20 of the Health and Safety
Code, the project’s housing sponsor has been allocated by the
California Tax Credit Allocation Committee a credit for federal
income tax purposes under Section 42 of the Internal Revenue

begin delete Code. end delete begin insert Code, relating to low-income housing credit. end insert

(ii) It qualifies for a credit under Section 42(h)(4)(B) of the
Internal Revenue begin delete Code. end delete begin insert Code, relating to special rule where 50
percent or more of building is financed with tax-exempt bonds
subject to volume cap. end insert

(B) The California Tax Credit Allocation Committee shall not
require fees for the credit under this section in addition to those
fees required for applications for the tax credit pursuant to Section
42 of the Internal Revenue begin delete Code. end delete begin insert Code, relating to low-income
housing credit. end insert The committee may require a fee if the application
for the credit under this section is submitted in a calendar year
after the year the application is submitted for the federal tax credit.

(C) (i) For a project that receives a preliminary reservation of
the state low-income housing tax credit, allowed pursuant to
subdivision (a), on or after January 1, 2009, and before January 1,
begin delete 2016, end delete begin insert 2020, end insert the credit shall be allocated to the partners of a
partnership owning the project in accordance with the partnership
agreement, regardless of how the federal low-income housing tax
credit with respect to the project is allocated to the partners, or
whether the allocation of the credit under the terms of the
agreement has substantial economic effect, within the meaning of
Section 704(b) of the Internal Revenue begin delete Code. end delete begin insert Code, relating to
determination of distributive share. end insert

(ii) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or deduction
otherwise allowable under this part that is attributable to the sale
or other disposition of that partner’s partnership interest made prior
to the expiration of the federal credit shall not be allowed in the
taxable year in which the sale or other disposition occurs, but shall
instead be deferred until and treated as if it occurred in the first
taxable year immediately following the taxable year in which the
federal credit period expires for the project described in clause (i).

(iii) This subparagraph does not apply to a project that receives
a preliminary reservation of state low-income housing tax credits
under the set-aside described in subdivision (c) of Section 50199.20
of the Health and Safety Code unless the project also receives a
preliminary reservation of federal low-income housing tax credits.

begin delete

(iv) This subparagraph shall cease to be operative with respect
to any project that receives a preliminary reservation of a credit
on or after January 1, 2016.

end delete

(2) (A) The California Tax Credit Allocation Committee shall
certify to the housing sponsor the amount of tax credit under this
section allocated to the housing sponsor for each credit period.

(B) In the case of a partnership or an “S” corporation, the
housing sponsor shall provide a copy of the California Tax Credit
Allocation Committee certification to the taxpayer.

(C) The taxpayer shall, upon request, provide a copy of the
certification to the Franchise Tax Board.

(D) All elections made by the taxpayer pursuant to Section 42
of the Internal Revenue begin delete Code end delete begin insert Code, relating to low-income housing
credit, end insert apply to this section.

(E) (i) Except as described in clause (ii), for buildings located
in designated difficult development areas (DDAs) or qualified
census tracts (QCTs), as defined in Section 42(d)(5)(B) of the
Internal Revenue Code, begin insert relating to increase in credit for buildings
in high-cost areas, end insert credits may be allocated under this section in
the amounts prescribed in subdivision (c), provided that the amount
of credit allocated under Section 42 of the Internal Revenue begin delete Code end delete
begin insert Code, relating to low-income housing credit, end insert is computed on 100
percent of the qualified basis of the building.

(ii) Notwithstanding clause (i), the California Tax Credit
Allocation Committee may allocate the credit for buildings located
in DDAs or QCTs that are restricted to having 50 percent of its
occupants be special needs households, as defined in the California
Code of Regulations by the California Tax Credit Allocation
Committee, even if the taxpayer receives federal credits pursuant
to Section 42(d)(5)(B) of the Internal Revenue Code, begin insert relating to
increase in credit for buildings in high cost areas, end insert provided that
the credit allowed under this section shall not exceed 30 percent
of the eligible basis of the building.

(F) (i) The California Tax Credit Allocation Committee may
allocate a credit under this section in exchange for a credit allocated
pursuant to Section 42(d)(5)(B) of the Internal Revenue begin delete Code end delete
begin insert Code, relating to increase in credit for buildings in high cost areas, end insert
in amounts up to 30 percent of the eligible basis of a building if
the credits allowed under Section 42 of the Internal Revenue begin delete Code end delete
begin insert Code, relating to low-income housing credit, end insert are reduced by an
equivalent amount.

(ii) An equivalent amount shall be determined by the California
Tax Credit Allocation Committee based upon the relative amount
required to produce an equivalent state tax credit to the taxpayer.

(c) Section 42(b) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to applicable percentage: 70 percent present value credit for
certain new buildings; 30 percent present value credit for certain
other buildings, end insert shall be modified as follows:

(1) In the case of any qualified low-income building placed in
service by the housing sponsor during 1987, the term “applicable
percentage” means 9 percent for each of the first three years and
3 percent for the fourth year for new buildings (whether or not the
building is federally subsidized) and for existing buildings.

(2) In the case of any qualified low-income building that receives
an allocation after 1989 and is a new building not federally
subsidized, the term “applicable percentage” means the following:

(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are not
federally subsidized for the taxable year, determined in accordance
with the requirements of Section 42(b)(2) of the Internal Revenue
Code, begin insert relating to temporary minimum credit rate for nonfederally
subsidized new buildings, end insert in lieu of the percentage prescribed in
Section 42(b)(1)(A) of the Internal Revenue Code.

(B) For the fourth year, the difference between 30 percent and
the sum of the applicable percentages for the first three years.

(3) In the case of any qualified low-income building that receives
an allocation after 1989 and that is a new building that is federally
subsidized or that is an existing building that is “at risk of
conversion,” the term “applicable percentage” means the following:

(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are federally
subsidized for the taxable year.

(B) For the fourth year, the difference between 13 percent and
the sum of the applicable percentages for the first three years.

(4) For purposes of this section, the term “at risk of conversion,”
with respect to an existing property means a property that satisfies
all of the following criteria:

(A) The property is a multifamily rental housing development
in which at least 50 percent of the units receive governmental
assistance pursuant to any of the following:

(i) New construction, substantial rehabilitation, moderate
rehabilitation, property disposition, and loan management set-aside
programs, or any other program providing project-based assistance
pursuant to Section 8 of the United States Housing Act of 1937,
Section 1437f of Title 42 of the United States Code, as amended.

(ii) The Below-Market-Interest-Rate Program pursuant to
Section 221(d)(3) of the National Housing Act, Sections
1715l(d)(3) and (5) of Title 12 of the United States Code.

(iii) Section 236 of the National Housing Act, Section 1715z-1
of Title 12 of the United States Code.

(iv) Programs for rent supplement assistance pursuant to Section
101 of the Housing and Urban Development Act of 1965, Section
1701s of Title 12 of the United States Code, as amended.

(v) Programs pursuant to Section 515 of the Housing Act of
1949, Section 1485 of Title 42 of the United States Code, as
amended.

(vi) The low-income housing credit program set forth in Section
42 of the Internal Revenue begin delete Code. end delete begin insert Code, relating to low-income
housing credit. end insert

(B) The restrictions on rent and income levels will terminate or
the federally insured mortgage on the property is eligible for
prepayment any time within five years before or after the date of
application to the California Tax Credit Allocation Committee.

(C) The entity acquiring the property enters into a regulatory
agreement that requires the property to be operated in accordance
with the requirements of this section for a period equal to the
greater of 55 years or the life of the property.

(D) The property satisfies the requirements of Section 42(e) of
the Internal Revenue begin delete Code regarding rehabilitation expenditures end delete
begin insert Code, relating to rehabilitation expenditures treated as end insert begin insert separate
new building end insert , except that the provisions of Section
42(e)(3)(A)(ii)(I) shall not apply.

(d) The term “qualified low-income housing project” as defined
in Section 42(c)(2) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to qualified low-income building, end insert is modified by adding the
following requirements:

(1) The taxpayer shall be entitled to receive a cash distribution
from the operations of the project, after funding required reserves,
begin delete that end delete begin insert that, end insert at the election of the taxpayer, is equal to:

(A) An amount not to exceed 8 percent of the lesser of:

(i) The owner equity, begin delete that end delete begin insert which end insert shall include the amount of the
capital contributions actually paid to the housing sponsor and shall
not include any amounts until they are paid on an investor note.

(ii) Twenty percent of the adjusted basis of the building as of
the close of the first taxable year of the credit period.

(B) The amount of the cashflow from those units in the building
that are not low-income units. For purposes of computing cashflow
under this subparagraph, operating costs shall be allocated to the
low-income units using the “floor space fraction,” as defined in
Section 42 of the Internal Revenue begin delete Code. end delete begin insert Code, relating to
low-income housing credit. end insert

(C) Any amount allowed to be distributed under subparagraph
(A) that is not available for distribution during the first five years
of the compliance period may be accumulated and distributed any
time during the first 15 years of the compliance period but not
thereafter.

(2) The limitation on return applies in the aggregate to the
partners if the housing sponsor is a partnership and in the aggregate
to the shareholders if the housing sponsor is an “S” corporation.

(3) The housing sponsor shall apply any cash available for
distribution in excess of the amount eligible to be distributed under
paragraph (1) to reduce the rent on rent-restricted units or to
increase the number of rent-restricted units subject to the tests of
Section 42(g)(1) of the Internal Revenue begin delete Code. end delete begin insert Code, relating to
in general. end insert

(e) The provisions of Section 42(f) of the Internal Revenue begin delete Code end delete
begin insert Code, relating to definition and special rules relating to credit
period, end insert shall be modified as follows:

(1) The term “credit period” as defined in Section 42(f)(1) of
the Internal Revenue begin delete Code end delete begin insert Code, relating to credit period defined, end insert
is modified by substituting “four taxable years” for “10 taxable
years.”

(2) The special rule for the first taxable year of the credit period
under Section 42(f)(2) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to special rule for 1st year of credit period, end insert shall not apply to the
tax credit under this section.

(3) Section 42(f)(3) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to determination of applicable percentage with respect to increases
in qualified basis after 1st year of credit period, end insert is modified to
read:

If, as of the close of any taxable year in the compliance period,
after the first year of the credit period, the qualified basis of any
building exceeds the qualified basis of that building as of the close
of the first year of the credit period, the housing sponsor, to the
extent of its tax credit allocation, shall be eligible for a credit on
the excess in an amount equal to the applicable percentage
determined pursuant to subdivision (c) for the four-year period
beginning with the later of the taxable years in which the increase
in qualified basis occurs.

(f) The provisions of Section 42(h) of the Internal Revenue
begin delete Code end delete begin insert Code, relating to limitation on aggregate credit allowable
with respect to projects located in a state, end insert shall be modified as
follows:

(1) Section 42(h)(2) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to allocated credit amount to apply to all taxable years ending
during or after credit allocation year, end insert does not apply and instead
the following provisions apply:

The total amount for the four-year credit period of the housing
credit dollars allocated in a calendar year to any building shall
reduce the aggregate housing credit dollar amount of the California
Tax Credit Allocation Committee for the calendar year in which
the allocation is made.

(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)(I),
(7), and (8) of Section 42(h) of the Internal Revenue begin delete Code end delete begin insert Code,
relating to limitation on aggregate credit allowable with respect
to projects located in a state, end insert do not begin delete apply. end delete begin insert apply to this section. end insert

(g) The aggregate housing credit dollar amount that may be
allocated annually by the California Tax Credit Allocation
Committee pursuant to this section, Section 12206, and Section
17058 shall be an amount equal to the sum of all the following:

(1) Seventy million dollars ($70,000,000) for the 2001 calendar
year, and, for the 2002 calendar year and each calendar year
thereafter, seventy million dollars ($70,000,000) increased by the
percentage, if any, by which the Consumer Price Index for the
preceding calendar year exceeds the Consumer Price Index for the
2001 calendar year. For the purposes of this paragraph, the term
“Consumer Price Index” means the last Consumer Price Index for
All Urban Consumers published by the federal Department of
Labor.

(2) The unused housing credit ceiling, if any, for the preceding
calendar years.

(3) The amount of housing credit ceiling returned in the calendar
year. For purposes of this paragraph, the amount of housing credit
dollar amount returned in the calendar year equals the housing
credit dollar amount previously allocated to any project that does
not become a qualified low-income housing project within the
period required by this section or to any project with respect to
which an allocation is canceled by mutual consent of the California
Tax Credit Allocation Committee and the allocation recipient.

(4) Five hundred thousand dollars ($500,000) per calendar year
for projects to provide farmworker housing, as defined in
subdivision (h) of Section 50199.7 of the Health and Safety Code.

(5) The amount of any unallocated or returned credits under
former Sections 17053.14, 23608.2, and 23608.3, as those sections
read prior to January 1, 2009, until fully exhausted for projects to
provide farmworker housing, as defined in subdivision (h) of
Section 50199.7 of the Health and Safety Code.

(h) The term “compliance period” as defined in Section 42(i)(1)
of the Internal Revenue begin delete Code end delete begin insert Code, relating to compliance period, end insert
is modified to mean, with respect to any building, the period of 30
consecutive taxable years beginning with the first taxable year of
the credit period with respect thereto.

(i) Section 42(j) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to recapture of credit, end insert does not apply and the following shall be
substituted in its place:

The requirements of this section shall be set forth in a regulatory
agreement between the California Tax Credit Allocation Committee
and the housing sponsor, and this agreement shall be subordinated,
when required, to any lien or encumbrance of any banks or other
institutional lenders to the project. The regulatory agreement
entered into pursuant to subdivision (f) of Section 50199.14 of the
Health and Safety Code shall apply, provided that the agreement
includes all of the following provisions:

(1) A term not less than the compliance period.

(2) A requirement that the agreement be recorded in the official
records of the county in which the qualified low-income housing
project is located.

(3) A provision stating which state and local agencies can
enforce the regulatory agreement in the event the housing sponsor
fails to satisfy any of the requirements of this section.

(4) A provision that the regulatory agreement shall be deemed
a contract enforceable by tenants as third-party beneficiaries
begin delete thereto, end delete begin insert thereto end insert and that allows individuals, whether prospective,
present, or former occupants of the building, who meet the income
limitation applicable to the building, the right to enforce the
regulatory agreement in any state court.

(5) A provision incorporating the requirements of Section 42
of the Internal Revenue begin delete Code end delete begin insert Code, relating to low-income housing
credit, end insert as modified by this section.

(6) A requirement that the housing sponsor notify the California
Tax Credit Allocation Committee or its designee if there is a
determination by the Internal Revenue Service that the project is
not in compliance with Section 42(g) of the Internal Revenue begin delete Code. end delete

begin insert Code, relating to qualified low-income housing project. end insert

(7) A requirement that the housing sponsor, as security for the
performance of the housing sponsor’s obligations under the
regulatory agreement, assign the housing sponsor’s interest in rents
that it receives from the project, provided that until there is a
default under the regulatory agreement, the housing sponsor is
entitled to collect and retain the rents.

(8) A provision that the remedies available in the event of a
default under the regulatory agreement that is not cured within a
reasonable cure period include, but are not limited to, allowing
any of the parties designated to enforce the regulatory agreement
to collect all rents with respect to the project; taking possession of
the project and operating the project in accordance with the
regulatory agreement until the enforcer determines the housing
sponsor is in a position to operate the project in accordance with
the regulatory agreement; applying to any court for specific
performance; securing the appointment of a receiver to operate
the project; or any other relief as may be appropriate.

(j) (1) The committee shall allocate the housing credit on a
regular basis consisting of two or more periods in each calendar
year during which applications may be filed and considered. The
committee shall establish application filing deadlines, the maximum
percentage of federal and state low-income housing tax credit
ceiling that may be allocated by the committee in that period, and
the approximate date on which allocations shall be made. If the
enactment of federal or state law, the adoption of rules or
regulations, or other similar events prevent the use of two allocation
periods, the committee may reduce the number of periods and
adjust the filing deadlines, maximum percentage of credit allocated,
and begin insert the end insert allocation dates.

(2) The committee shall adopt a qualified allocation plan, as
provided in Section 42(m)(1) of the Internal Revenue begin delete Code. end delete begin insert Code,
relating to plans for allocation of credit among projects. end insert In
adopting this plan, the committee shall comply with the provisions
of Sections 42(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue

begin delete Code. end delete begin insert Code, relating to qualified allocation plan and relating to
certain selection criteria must be used, respectively. end insert

(3) Notwithstanding Section 42(m) of the Internal Revenue
Code, begin insert relating to responsibilities of housing credit agencies, end insert the
California Tax Credit Allocation Committee shall allocate housing
credits in accordance with the qualified allocation plan and
regulations, which shall include the following provisions:

(A) All housing sponsors, as defined by paragraph (3) of
subdivision (a), shall demonstrate at the time the application is
filed with the committee that the project meets the following
threshold requirements:

(i) The housing sponsor shall demonstrate that there is a need
for low-income housing in the community or region for which it
is proposed.

(ii) The project’s proposed financing, including tax credit
proceeds, shall be sufficient to complete the project and shall be
adequate to operate the project for the extended use period.

(iii) The project shall have enforceable financing commitments,
either construction or permanent financing, for at least 50 percent
of the total estimated financing of the project.

(iv) The housing sponsor shall have and maintain control of the
site for the project.

(v) The housing sponsor shall demonstrate that the project
complies with all applicable local land use and zoning ordinances.

(vi) The housing sponsor shall demonstrate that the project
development team has the experience and the financial capacity
to ensure project completion and operation for the extended use
period.

(vii) The housing sponsor shall demonstrate the amount of tax
credit that is necessary for the financial feasibility of the project
and its viability as a qualified low-income housing project
throughout the extended use period, taking into account operating
expenses, a supportable debt service, reserves, funds set aside for
rental subsidies and required equity, and a development fee that
does not exceed a specified percentage of the eligible basis of the
project prior to inclusion of the development fee in the eligible
basis, as determined by the committee.

(B) The committee shall give a preference to those projects
satisfying all of the threshold requirements of subparagraph (A)
if both of the following apply:

(i) The project serves the lowest income tenants at rents
affordable to those tenants.

(ii) The project is obligated to serve qualified tenants for the
longest period.

(C) In addition to the provisions of subparagraphs (A) and (B),
the committee shall use the following criteria in allocating housing
credits:

(i) Projects serving large families in which a substantial number,
as defined by the committee, of all residential units are low-income
units with three and more bedrooms.

(ii) Projects providing single-room occupancy units serving
very low income tenants.

(iii) Existing projects that are “at risk of conversion,” as defined
by paragraph (4) of subdivision (c).

(iv) Projects for which a public agency provides direct or indirect
long-term financial support for at least 15 percent of the total
project development costs or projects for which the owner’s equity
constitutes at least 30 percent of the total project development
costs.

(v) Projects that provide tenant amenities not generally available
to residents of low-income housing projects.

(4) For purposes of allocating credits pursuant to this section,
the committee shall not give preference to any project by virtue
of the date of submission of its application except to break a tie
when two or more of the projects have an equal rating.

(5) Not less than 20 percent of the low-income housing tax
credits available annually under this section, Section 12206, and
Section 17058 shall be set aside for allocation to rural areas as
defined in Section 50199.21 of the Health and Safety Code. Any
amount of credit set aside for rural areas remaining on or after
October 31 of any calendar year shall be available for allocation
to any eligible project. No amount of credit set aside for rural areas
shall be considered available for any eligible project so long as
there are eligible rural applications pending on October 31.

(k) Section 42(l) of the Internal Revenue begin delete Code end delete begin insert Code, relating
to certifications and other reports to secretary, end insert shall be modified
as follows:

The term “secretary” shall be replaced by the term begin delete “California
Franchise end delete begin insert “Franchise end insert Tax Board.”

(l) In the case in which the begin delete state end delete credit allowed under this section
exceeds the “tax,” the excess may be carried over to reduce the
“tax” in the following year, and succeeding years if necessary,
until the credit has been exhausted.

(m) A project that received an allocation of a 1989 federal
housing credit dollar amount shall be eligible to receive an
allocation of a 1990 state housing credit dollar amount, subject to
all of the following conditions:

(1) The project was not placed in service prior to 1990.

(2) To the extent the amendments made to this section by the
Statutes of 1990 conflict with any provisions existing in this section
prior to those amendments, the prior provisions of law shall prevail.

(3) Notwithstanding paragraph (2), a project applying for an
allocation under this subdivision begin delete shall be end delete begin insert is end insert subject to the
requirements of paragraph (3) of subdivision (j).

(n) The credit period with respect to an allocation of credit in
1989 by the California Tax Credit Allocation Committee of which
any amount is attributable to unallocated credit from 1987 or 1988
shall not begin until after December 31, 1989.

(o) The provisions of Section 11407(a) of Public Law 101-508,
relating to the effective date of the extension of the low-income
housing credit, apply to calendar years after 1989.

(p) The provisions of Section 11407(c) of Public Law 101-508,
relating to election to accelerate credit, do not apply.

(q) (1) A corporation may elect to assign any portion of any
credit allowed under this section to one or more affiliated
corporations for each taxable year in which the credit is allowed.
For purposes of this subdivision, “affiliated corporation” has the
meaning provided in subdivision (b) of Section 25110, as that
section was amended by Chapter 881 of the Statutes of 1993, as
of the last day of the taxable year in which the credit is allowed,
except that “100 percent” is substituted for “more than 50 percent”
wherever it appears in the section, as that section was amended by
Chapter 881 of the Statutes of 1993, and “voting common stock”
is substituted for “voting stock” wherever it appears in the section,
as that section was amended by Chapter 881 of the Statutes of
1993.

(2) The election provided in paragraph (1):

(A) May be based on any method selected by the corporation
that originally receives the credit.

(B) Shall be irrevocable for the taxable year the credit is allowed,
once made.

(C) May be changed for any subsequent taxable year if the
election to make the assignment is expressly shown on each of the
returns of the affiliated corporations that assign and receive the
credits.

begin insert

(r) (1) For a project that receives a preliminary reservation
under this section beginning on or after January 1, 2016, and
before January 1, 2020, a taxpayer may make an irrevocable
election in its application to the California Tax Credit Allocation
Committee to sell all or any portion of any credit allowed under
this section to one or more unrelated parties for each taxable year
in which the credit is allowed subject to both of the following
conditions:

end insert begin insert

(A) The credit is sold for consideration that is not less than 80
percent of the amount of the credit.

end insert begin insert

(B) (i) The unrelated party or parties purchasing any or all of
the credit pursuant to this subdivision is a taxpayer allowed the
credit under this section for the taxable year of the purchase or
any prior taxable year or is a taxpayer allowed the federal credit
under Section 42 of the Internal Revenue Code, relating to
low-income housing credit, for the taxable year of the purchase
or any prior taxable year in connection with any project located
in this state.

end insert begin insert

(ii) For purposes of this subparagraph, “taxpayer allowed the
credit under this section” means a taxpayer that is allowed the
credit under this section without regard to the purchase of a credit
pursuant to this subdivision without regard to any of the following:

end insert begin insert

(I) The purchase of a credit under this section pursuant to this
subdivision.

end insert begin insert

(II) The assignment of a credit under this section pursuant to
subdivision (q).

end insert begin insert

(III) The assignment of a credit under this section pursuant to
Section 23363.

end insert begin insert

(2) (A) The taxpayer that originally received the credit shall
report to the California Tax Credit Allocation Committee within
10 days of the sale of the credit, in the form and manner specified
by the California Tax Credit Allocation Committee, all required
information regarding the purchase and sale of the credit,
including the social security or other taxpayer identification
number of the unrelated party or parties to whom the credit has
been sold, the face amount of the credit sold, and the amount of
consideration received by the taxpayer for the sale of the credit.

end insert begin insert

(B) The California Tax Credit Allocation Committee shall
provide an annual listing to the Franchise Tax Board, in a form
and manner agreed upon by the California Tax Credit Allocation
Committee and the Franchise Tax Board, of the taxpayers that
have sold or purchased a credit pursuant to this subdivision.

end insert begin insert

(3) (A) A credit may be sold pursuant to this subdivision to
more than one unrelated party.

end insert begin insert

(B) (i) Except as provided in clause (ii), a credit shall not be
resold by the unrelated party to another taxpayer or other party.

end insert begin insert

(ii) All or any portion of any credit allowed under this section
may be resold once by an original purchaser to one or more
unrelated parties, subject to all of the requirements of this
subdivision.

end insert begin insert

(4) Notwithstanding any other law, the taxpayer that originally
received the credit that is sold pursuant to paragraph (1) shall
remain solely liable for all obligations and liabilities imposed on
the taxpayer by this section with respect to the credit, none of
which shall apply to a party to whom the credit has been sold or
subsequently transferred. Parties that purchase credits pursuant
to paragraph (1) shall be entitled to utilize the purchased credits
in the same manner in which the taxpayer that originally received
the credit could utilize them.

end insert begin insert

(5) A taxpayer shall not sell a credit allowed by this section if
the taxpayer was allowed the credit on any tax return of the
taxpayer.

end insert begin insert

(6) Notwithstanding paragraph (1), the taxpayer, with the
approval of the Executive Director of the California Tax Credit
Allocation Committee, may rescind the election to sell all or any
portion of the credit allowed under this section if the consideration
for the credit falls below 80 percent of the amount of the credit
after the California Tax Credit Allocation Committee reservation.

end insert begin insert

(s) The California Tax Credit Allocation Committee may
prescribe rules, guidelines, or procedures necessary or appropriate
to carry out the purposes of this section, including any guidelines
regarding the allocation of the credit allowed under this section.
Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
3 of Title 2 of the Government Code shall not apply to any rule,
guideline, or procedure prescribed by the California Tax Credit
Allocation Committee pursuant to this section.

end insert begin delete

(r)

end delete

begin insert (t) end insert  Any unused credit may continue to be carried forward, as
provided in subdivision (l), until the credit has been exhausted.

begin insert (u) end insert begin insert   end insert This section shall remain in effect on and after December
1, 1990, for as long as Section 42 of the Internal Revenue Code,
relating to low-income housing begin delete credits, end delete begin insert credit, end insert remains in effect.

begin delete

(s)

end delete

begin insert (v) end insert  The amendments to this section made by begin delete the act adding this
subdivision end delete begin insert Chapter 1222 of the Statutes of 1993 end insert shall apply only
to taxable years beginning on or after January 1, 1994, except that
paragraph (1) of subdivision (q), as amended, shall apply to taxable
years beginning on or after January 1, 1993.

begin insert

begin insert SEC. 91. end insert   

end insert

begin insert Section 23688.5 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

begin insert

begin insert 23688.5. end insert   

(a) In the case of a qualified taxpayer who donates
fresh fruits or fresh vegetables to a food bank located in California
under Chapter 5 (commencing with Section 58501) of Part 1 of
Division 21 of the Food and Agricultural Code, for taxable years
beginning on or after January 1, 2017, and before January 1,
2022, there shall be allowed as a credit against the “tax,” defined
by Section 23036, an amount equal to 15 percent of the qualified
value of those fresh fruits or fresh vegetables.

(b) For purposes of this section:

(1) “Qualified taxpayer” means the person responsible for
planting a crop, managing the crop, and harvesting the crop from
the land.

(2) (A) “Qualified value” shall be calculated by using the
weighted average wholesale price based on the qualified taxpayer’s
total like grade wholesale sales of the donated item sold within
the calendar month of the qualified taxpayer’s donation.

(B) If no wholesale sales of the donated item have occurred in
the calendar month of the qualified taxpayer’s donation, the
“qualified value” shall be equal to the nearest regional wholesale
market price for the calendar month of the donation based upon
the same grade products as published by the United States
Department of Agriculture’s Agricultural Marketing Service or
its successor.

(c) If the credit allowed by this section is claimed by the
qualified taxpayer, any deduction otherwise allowed under this
part for that amount of the cost paid or incurred by the qualified
taxpayer that is eligible for the credit shall be reduced by the
amount of the credit provided in subdivision (a).

(d) The donor shall provide to the nonprofit organization the
qualified value of the donated fresh fruits or fresh vegetables and
information regarding the origin of where the donated fruits or
vegetables were grown, and upon receipt of the donated fresh
fruits or fresh vegetables, the nonprofit organization shall provide
a certificate to the donor. The certificate shall contain a statement
signed and dated by a person authorized by that organization that
the product is donated under Chapter 5 (commencing with Section
58501) of Part 1 of Division 21 of the Food and Agricultural Code.
The certificate shall also contain the type and quantity of product
donated, the name of donor or donors, the name and address of
the donee nonprofit organization, and, as provided by the donor,
the qualified value of the donated fresh fruits or fresh vegetables
and its origins. Upon the request of the Franchise Tax Board, the
qualified taxpayer shall provide a copy of the certification to the
Franchise Tax Board.

(e) The credit allowed by this section may be claimed only on
a timely filed original return.

(f) In the case where the credit allowed by this section exceeds
the “tax,” the excess may be carried over to reduce the “tax” in
the following year, and for the six succeeding years if necessary,
until the credit has been exhausted.

(g) This section shall be repealed on December 1, 2022.

end insert

begin insert

begin insert SEC. 92. end insert   

end insert

begin insert Section 31020 of the end insert begin insert Revenue and Taxation Code end insert begin insert is
repealed. end insert

begin delete

31020.  

The board, in consultation with the Department of Food
and Agriculture, shall adopt a system for reporting the movement
of commercial cannabis and cannabis products throughout the
distribution chain. The system shall not be duplicative of the
electronic database administered by the Department of Food and
Agriculture specified in Section 19335 of the Business and
Professions Code. The system shall also employ secure packaging
and be capable of providing information to the board. This system
shall capture, at a minimum, all of the following:

(a) The amount of tax due by the designated entity.

(b) The name, address, and license number of the designated
entity that remitted the tax.

(c) The name, address, and license number of the succeeding
entity receiving the product.

(d) The transaction date.

(e) Any other information deemed necessary by the board for
the taxation and regulation of marijuana and marijuana products.

end delete

begin insert

begin insert SEC. 93. end insert   

end insert

begin insert Section 1058.5 of the end insert begin insert Water Code end insert begin insert is amended to read: end insert

1058.5.  

(a) This section applies to any emergency regulation
adopted by the board for which the board makes both of the
following findings:

(1) The emergency regulation is adopted to prevent the waste,
unreasonable use, unreasonable method of use, or unreasonable
method of diversion, of water, to promote water recycling or water
conservation, to require curtailment of diversions when water is
not available under the diverter’s priority of right, or in furtherance
of any of the foregoing, to require reporting of diversion or use or
the preparation of monitoring reports.

(2) The emergency regulation is adopted in response to
conditions which exist, or are threatened, in a critically dry year
immediately preceded by two or more consecutive below normal,
dry, or critically dry years or during a period for which the
Governor has issued a proclamation of a state of emergency under
the California Emergency Services Act (Chapter 7 (commencing
with Section 8550) of Division 1 of Title 2 of the Government
Code) based on drought conditions.

(b) Notwithstanding Sections 11346.1 and 11349.6 of the
Government Code, any findings of emergency adopted by the
board, in connection with the adoption of an emergency regulation
under this section, are not subject to review by the Office of
Administrative Law.

(c) An emergency regulation adopted by the board under this
section may remain in effect for up to 270 days, as determined by
the board, and is deemed repealed immediately upon a finding by
the board that due to changed conditions it is no longer necessary
for the regulation to remain in effect. An emergency regulation
adopted by the board under this section may be renewed if the
board determines that the conditions specified in paragraph (2) of
subdivision (a) are still in effect.

(d) In addition to any other applicable civil or criminal penalties,
any person or entity who violates a regulation adopted by the board
pursuant to this section is guilty of an infraction punishable by a
fine of up to five hundred dollars ($500) for each day in which the
violation occurs.

(e) (1) Notwithstanding subdivision (b) of Section begin delete 1551, end delete begin insert 1551
or end insert subdivision begin delete (d) of Section 1845, and subdivision (f) of Section
1846, end delete begin insert (e) of Section 1848, end insert a civil liability imposed under Chapter
12 (commencing with Section 1825) of Part 2 of Division 2 by the
board or a court for a violation of an emergency conservation
regulation adopted pursuant to this section shall be deposited, and
separately accounted for, in the Water Rights Fund. Funds
deposited in accordance with this subdivision shall be available,
upon appropriation, for water conservation activities and programs.

(2) For purposes of this subdivision, an “emergency conservation
regulation” means an emergency regulation that requires an end
user of water, a water retailer, or a water wholesaler to conserve
water or report to the board on water conservation. Water
conservation includes restrictions or limitations on particular uses
of water or a reduction in the amount of water used or served, but
does not include curtailment of diversions when water is not
available under the diverter’s priority of right or reporting
requirements related to curtailments.

begin insert

begin insert SEC. 94. end insert   

end insert

begin insert Section 1525 of the end insert begin insert Water Code end insert begin insert is amended to read: end insert

1525.  

(a) Each person or entity who holds a permit or license
to appropriate water, and each lessor of water leased under Chapter
1.5 (commencing with Section 1020) of Part 1, shall pay an annual
fee according to a fee schedule established by the board.

(b) Each person or entity who files any of the following shall
pay a fee according to a fee schedule established by the board:

(1) An application for a permit to appropriate water.

(2) A registration of appropriation for a small domestic use,
small irrigation use, or livestock stockpond use.

(3) A petition for an extension of time within which to begin
construction, to complete construction, or to apply the water to
full beneficial use under a permit.

(4) A petition to change the point of diversion, place of use, or
purpose of use, under a permit, license, or registration.

(5) A petition to change the conditions of a permit or license,
requested by the permittee or licensee, that is not otherwise subject
to paragraph (3) or (4).

(6) A petition to change the point of discharge, place of use, or
purpose of use, of treated wastewater, requested pursuant to Section
1211.

(7) An application for approval of a water lease agreement.

(8) A request for release from priority pursuant to Section 10504.

(9) An application for an assignment of a state-filed application
pursuant to Section 10504.

begin insert

(10) A statement of water diversion and use pursuant to Part
5.1 (commencing with Section 5100) that reports that water was
used for cannabis cultivation.

end insert

(c) The board shall set the fee schedule authorized by this section
so that the total amount of fees collected pursuant to this section
equals that amount necessary to recover costs incurred in
connection with the issuance, administration, review, monitoring,
and enforcement of permits, licenses, certificates, and registrations
to appropriate water, water leases, begin insert statements of water diversion
and use for cannabis cultivation, end insert and orders approving changes in
point of discharge, place of use, or purpose of use of treated
wastewater. The board may include, as recoverable costs, but is
not limited to including, the costs incurred in reviewing
applications, registrations, begin insert statements of water diversion and use
for cannabis cultivation, end insert petitions and requests, prescribing terms
of permits, licenses, registrations, and change orders, enforcing
and evaluating compliance with permits, licenses, certificates,
registrations, change orders, and water leases, inspection,
monitoring, planning, modeling, reviewing documents prepared
for the purpose of regulating the diversion and use of water,
applying and enforcing the prohibition set forth in Section 1052
against the unauthorized diversion or use of water subject to this
begin delete division, end delete begin insert division and the water diversion related provisions of
Article 6 (commencing with Section 19331) of Chapter 3.5 of
Division 8 of the Business and Professions Code, end insert and the
administrative costs incurred in connection with carrying out these
actions.

(d) (1) The board shall adopt the schedule of fees authorized
under this section as emergency regulations in accordance with
Section 1530.

(2) For filings subject to subdivision (b), the schedule may
provide for a single filing fee or for an initial filing fee followed
by an annual fee, as appropriate to the type of filing involved, and
may include supplemental fees for filings that have already been
made but have not yet been acted upon by the board at the time
the schedule of fees takes effect.

(3) The board shall set the amount of total revenue collected
each year through the fees authorized by this section at an amount
equal to the amounts appropriated by the Legislature for
expenditure for support of water rights program activities from
the Water Rights Fund established under Section 1550, taking into
account the reserves in the Water Rights Fund. The board shall
review and revise the fees each fiscal year as necessary to conform
with the amounts appropriated. If the board determines that the
revenue collected during the preceding year was greater than, or
less than, the amounts appropriated, the board may further adjust
the annual fees to compensate for the over or under collection of
revenue.

(e) Annual fees imposed pursuant to this section for the 2003-04
fiscal year shall be assessed for the entire 2003-04 fiscal year.

begin insert

begin insert SEC. 95. end insert   

end insert

begin insert Section 1535 of the end insert begin insert Water Code end insert begin insert is amended to read: end insert

1535.  

(a) Any fee subject to this chapter that is required in
connection with the filing of an application, registration, begin delete request end delete
begin insert request, statement, end insert or proof of claim, other than an annual fee
required after the period covered by the initial filing fee, shall be
paid to the board.

(b) If a fee established under subdivision (b) of Section 1525,
Section 1528, or Section 13160.1 is not paid when due, the board
may cancel the application, registration, petition, request, begin insert statement, end insert
or claim, or may refer the matter to the State Board of Equalization
for collection of the unpaid fee.

begin insert

begin insert SEC. 96. end insert   

end insert

begin insert Section 1552 of the end insert begin insert Water Code end insert begin insert is amended to read: end insert

1552.  

Except as provided in subdivision (e) of Section 1058.5,
moneys in the Water Rights Fund are available for expenditure,
upon appropriation by the Legislature, for the following purposes:

(a) For expenditure by the State Board of Equalization in the
administration of this chapter and the Fee Collection Procedures
Law (Part 30 (commencing with Section 55001) of Division 2 of
the Revenue and Taxation Code) in connection with any fee or
expense subject to this chapter.

(b) For the payment of refunds, pursuant to Part 30 (commencing
with Section 55001) of Division 2 of the Revenue and Taxation
Code, of fees or expenses collected pursuant to this chapter.

(c) For expenditure by the board for the purposes of carrying
out this division, Division 1 (commencing with Section 100), Part
2 (commencing with Section 10500) and Chapter 11 (commencing
with Section 10735) of Part 2.74 of Division 6, begin delete and end delete Article 7
(commencing with Section 13550) of Chapter 7 of Division begin delete 7. end delete begin insert 7,
and the water diversion related provisions of Article 6
(commencing with Section 19331) of Chapter 3.5 of Division 8 of
the Business and Professions Code. end insert

(d) For expenditures by the board for the purposes of carrying
out Sections 13160 and 13160.1 in connection with activities
involving hydroelectric power projects subject to licensing by the
Federal Energy Regulatory Commission.

(e) For expenditures by the board for the purposes of carrying
out Sections 13140 and 13170 in connection with plans and policies
that address the diversion or use of water.

begin insert

begin insert SEC. 97. end insert   

end insert

begin insert Section 1831 of the end insert begin insert Water Code end insert begin insert is amended to read: end insert

1831.  

(a) When the board determines that any person is
violating, or threatening to violate, any requirement described in
subdivision (d), the board may issue an order to that person to
cease and desist from that violation.

(b) The cease and desist order shall require that person to comply
forthwith or in accordance with a time schedule set by the board.

(c) The board may issue a cease and desist order only after
notice and an opportunity for hearing pursuant to Section 1834.

(d) The board may issue a cease and desist order in response to
a violation or threatened violation of any of the following:

(1) The prohibition set forth in Section 1052 against the
unauthorized diversion or use of water subject to this division.

(2) Any term or condition of a permit, license, certification, or
registration issued under this division.

(3) Any decision or order of the board issued under this part,
Section 275, Chapter 11 (commencing with Section 10735) of Part
2.74 of Division 6, or Article 7 (commencing with Section 13550)
of Chapter 7 of Division 7, in which decision or order the person
to whom the cease and desist order will be issued, or a predecessor
in interest to that person, was named as a party directly affected
by the decision or order.

(4) A regulation adopted under Section 1058.5.

(5) Any extraction restriction, limitation, order, or regulation
adopted or issued under Chapter 11 (commencing with Section
10735) of Part 2.74 of Division 6.

begin insert

(6) Any diversion or use of water for cannabis cultivation if any
of the following applies:

end insert begin insert

(A) A license is required, but has not been obtained, under
Article 6 (commencing with Section 19331) of Chapter 3.5 of
Division 8 of the Business and Professions Code.

end insert begin insert

(B) The diversion is not in compliance with an applicable
limitation or requirement established by the board or the
Department of Fish and Wildlife under Section 13149.

end insert begin insert

(C) The diversion or use is not in compliance with a requirement
imposed under subdivision (d) or (e) of Section 19332.2 of the
Business and Professions Code.

end insert

(e) This article does not begin delete authorize the board to regulate in any
manner, the diversion or use of water not otherwise subject to
regulation of the board under this part. end delete begin insert alter the regulatory
authority of the board under other provisions of law. end insert

begin insert

begin insert SEC. 98. end insert   

end insert

begin insert Section 1840 of the end insert begin insert Water Code end insert begin insert is amended to read: end insert

1840.  

(a) (1) Except as provided in subdivision (b), a person
who, on or after January 1, 2016, diverts 10 acre-feet of water per
year or more under a permit or license shall install and maintain
a device or employ a method capable of measuring the rate of
direct diversion, rate of collection to storage, and rate of withdrawal
or release from storage. The measurements shall be made using
the best available technologies and best professional practices, as
defined in Section 5100, using a device or methods satisfactory to
the board, as follows:

(A) A device shall be capable of continuous monitoring of the
rate and quantity of water diverted and shall be properly
maintained. The permittee or licensee shall provide the board with
evidence that the device has been installed with the first report
submitted after installation of the device. The permittee or licensee
shall provide the board with evidence demonstrating that the device
is functioning properly as part of the reports submitted at five-year
intervals after the report documenting installation of the device,
or upon request of the board.

(B) In developing regulations pursuant to Section 1841, the
board shall consider devices and methods that provide accurate
measurement of the total amount diverted and the rate of diversion.
The board shall consider devices and methods that provide accurate
measurements within an acceptable range of error, including the
following:

(i) Electricity records dedicated to a pump and recent pump test.

(ii) Staff gage calibrated with an acceptable streamflow rating
curve.

(iii) Staff gage calibrated for a flume or weir.

(iv) Staff gage calibrated with an acceptable storage capacity
curve.

(v) Pressure transducer and acceptable storage capacity curve.

(2) The permittee or licensee shall maintain a record of all
diversion monitoring that includes the date, time, and diversion
rate at time intervals of one hour or less, and the total amount of
water diverted. These records shall be included with reports
submitted under the permit or license, as required under subdivision
(c), or upon request of the board.

(b) (1) The board may modify the requirements of subdivision
(a) upon finding either of the following:

(A) That strict compliance is infeasible, is unreasonably
expensive, would unreasonably affect public trust uses, or would
result in the waste or unreasonable use of water.

(B) That the need for monitoring and reporting is adequately
addressed by other conditions of the permit or license.

(2) The board may increase the 10-acre-foot reporting threshold
of subdivision (a) in a watershed or subwatershed, after considering
the diversion reporting threshold in relation to quantity of water
within the watershed or subwatershed. The board may increase
the 10-acre-foot reporting threshold to 25 acre-feet or above if it
finds that the benefits of the additional information within the
watershed or subwatershed are substantially outweighed by the
cost of installing measuring devices or employing methods for
measurement for diversions at the 10-acre-foot threshold.

(c) At least annually, a person who diverts water under a
registration, permit, or license shall report to the board the
following information:

(1) The quantity of water diverted by month.

(2) The maximum rate of diversion by months in the preceding
calendar year.

(3) The information required by subdivision (a), if applicable.

begin insert

(4) The amount of water used, if any, for cannabis cultivation.

end insert

(d) Compliance with the applicable requirements of this section
is a condition of every registration, permit, or license.

begin insert

begin insert SEC. 99. end insert   

end insert

begin insert Section 1845 of the end insert begin insert Water Code end insert begin insert is amended to read: end insert

1845.  

(a) Upon the failure of any person to comply with a
cease and desist order issued by the board pursuant to this chapter,
the Attorney General, upon the request of the board, shall petition
the superior court for the issuance of prohibitory or mandatory
injunctive relief as appropriate, including a temporary restraining
order, preliminary injunction, or permanent injunction.

(b) (1) A person or entity who violates a cease and desist order
issued pursuant to this chapter may be liable in an amount not to
exceed the following:

(A) If the violation occurs in a critically dry year immediately
preceded by two or more consecutive below normal, dry, or
critically dry years or during a period for which the Governor has
issued a proclamation of a state of emergency under the California
Emergency Services Act (Chapter 7 (commencing with Section
8550) of Division 1 of Title 2 of the Government Code) based on
drought conditions, ten thousand dollars ($10,000) for each day
in which the violation occurs.

(B) If the violation is not described by subparagraph (A), one
thousand dollars ($1,000) for each day in which the violation
occurs.

(2) Civil liability may be imposed by the superior court. The
Attorney General, upon the request of the board, shall petition the
superior court to impose, assess, and recover those sums.

(3) Civil liability may be imposed administratively by the board
pursuant to Section 1055.

begin delete

(c) In determining the appropriate amount, the court, or the
board, as the case may be, shall take into consideration all relevant
circumstances, including, but not limited to, the extent of harm
caused by the violation, the nature and persistence of the violation,
the length of time over which the violation occurs, and the
corrective action, if any, taken by the violator.

(d) All funds recovered pursuant to this section shall be
deposited in the Water Rights Fund established pursuant to Section
1550.

end delete

begin insert

begin insert SEC. 100. end insert   

end insert

begin insert Section 1846 of the end insert begin insert Water Code end insert begin insert is amended to read: end insert

1846.  

(a) A person or entity may be liable for a violation of
any of the following in an amount not to exceed five hundred
dollars ($500) for each day in which the violation occurs:

(1) A term or condition of a permit, license, certificate, or
registration issued under this division.

(2) A regulation or order adopted by the board.

(b) Civil liability may be imposed by the superior court. The
Attorney General, upon the request of the board, shall petition the
superior court to impose, assess, and recover those sums.

(c) Civil liability may be imposed administratively by the board
pursuant to Section 1055.

begin delete

(d) In determining the appropriate amount of civil liability, the
court, pursuant to subdivision (b), or the board, pursuant to
subdivision (c), may take into consideration all relevant
circumstances, including, but not limited to, the extent of harm
caused by the violation, the nature and persistence of the violation,
the length of time over which the violation occurs, and the
corrective action, if any, taken by the violator.

(e) No liability shall be recoverable under this section for any
violation for which liability is recovered under Section 1052.

(f) All funds recovered pursuant to this section shall be deposited
in the Water Rights Fund established pursuant to Section 1550.

end delete

begin insert

begin insert SEC. 101. end insert   

end insert

begin insert Section 1847 is added to the end insert begin insert Water Code end insert begin insert , to read: end insert

begin insert

begin insert 1847. end insert   

(a) A person or entity may be liable for a violation of
any of the requirements of subdivision (b) in an amount not to
exceed the sum of the following:

(1) Five hundred dollars ($500), plus two hundred fifty dollars
($250) for each additional day on which the violation continues
if the person fails to correct the violation within 30 days after the
board has called the violation to the attention of that person.

(2) Two thousand five hundred dollars ($2,500) for each
acre-foot of water diverted or used in violation of the applicable
requirement.

(b) Liability may be imposed for any of the following violations:

(1) Violation of a limitation or requirement established by the
board or the Department of Fish and Wildlife under Section 13149.

(2) Failure to submit information, or making a material
misstatement in information submitted, under subdivision (a), (b),
or (c) of Section 19332.2 of the Business and Professions Code.

(3) Violation of any requirement imposed under subdivision (e)
of Section 19332.2 of the Business and Professions Code.

(4) Diversion or use of water for cannabis cultivation for which
a license is required, but has not been obtained, under Article 6
(commencing with Section 19331) of Chapter 3.5 of Division 8 of
the Business and Professions Code.

(c) Civil liability may be imposed by the superior court. The
Attorney General, upon the request of the board, shall petition the
superior court to impose, assess, and recover those sums.

(d) Civil liability may be imposed administratively by the board
pursuant to Section 1055.

end insert

begin insert

begin insert SEC. 102. end insert   

end insert

begin insert Section 1848 is added to the end insert begin insert Water Code end insert begin insert , to read: end insert

begin insert

begin insert 1848. end insert   

(a) Except as provided in subdivisions (b) and (c),
remedies under this chapter are in addition to, and do not
supersede or limit, any other remedy, civil or criminal.

(b) Civil liability shall not be imposed both administratively
and by the superior court for the same violation.

(c) No liability shall be recoverable under Section 1846 or 1847
for a violation for which liability is recovered under Section 1052.

(d) In determining the appropriate amount, the court, or the
board, as the case may be, shall take into consideration all relevant
circumstances, including, but not limited to, the extent of harm
caused by the violation, the nature and persistence of the violation,
the length of time over which the violation occurs, and the
corrective action, if any, taken by the violator.

(e) All funds recovered pursuant to this article shall be deposited
in the Water Rights Fund established pursuant to Section 1550.

end insert

begin insert

begin insert SEC. 103. end insert   

end insert

begin insert Section 5103 of the end insert begin insert Water Code end insert begin insert is amended to read: end insert

5103.  

Each statement shall be prepared on a form provided by
the board. The statement shall include all of the following
information:

(a) The name and address of the person who diverted water and
of the person filing the statement.

(b) The name of the stream or other source from which water
was diverted, and the name of the next major stream or other body
of water to which the source is tributary.

(c) The place of diversion. The location of the diversion works
shall be depicted on a specific United States Geological Survey
topographic map, or shall be identified using the California
Coordinate System, or latitude and longitude measurements. If
assigned, the public land description to the nearest 40-acre
subdivision and the assessor’s parcel number shall also be provided.

(d) The capacity of the diversion works and of the storage
reservoir, if any, and the months in which water was used during
the preceding calendar year.

(e) (1) (A) At least monthly records of water diversions. The
measurements of the diversion shall be made in accordance with
Section 1840.

(B) (i) On and after July 1, 2016, the measurement of a
diversion of 10 acre-feet or more per year shall comply with
regulations adopted by the board pursuant to Article 3
(commencing with Section 1840) of Chapter 12 of Part 2.

(ii) The requirement of clause (i) is extended to January 1, 2017,
for any statement filer that enters into a voluntary agreement that
is acceptable to the board to reduce the statement filer’s diversions
during the 2015 irrigation season.

(2) (A) The terms of, and eligibility for, any grant or loan
awarded or administered by the department, the board, or the
California Bay-Delta Authority on behalf of a person that is subject
to paragraph (1) shall be conditioned on compliance with that
paragraph.

(B) Notwithstanding subparagraph (A), the board may determine
that a person is eligible for a grant or loan even though the person
is not complying with paragraph (1), if both of the following apply:

(i) The board determines that the grant or loan will assist the
grantee or loan recipient in complying with paragraph (1).

(ii) The person has submitted to the board a one-year schedule
for complying with paragraph (1).

(C) It is the intent of the Legislature that the requirements of
this subdivision shall complement and not affect the scope of
authority granted to the board by provisions of law other than this
article.

(f)  begin insert (1) end insert begin insert   end insert The purpose of use.

begin insert

(2) The amount of water used, if any, for cannabis cultivation.

end insert

(g) A general description of the area in which the water was
used. The location of the place of use shall be depicted on a specific
United States Geological Survey topographic map and on any other
maps with identifiable landmarks. If assigned, the public land
description to the nearest 40-acre subdivision and the assessor’s
parcel number shall also be provided.

(h) The year in which the diversion was commenced as near as
is known.

begin insert

begin insert SEC. 104. end insert   

end insert

begin insert Section 13149 is added to the end insert begin insert Water Code end insert begin insert , to read: end insert

begin insert

begin insert 13149. end insert   

(a) (1) (A) The board, in consultation with the
Department of Fish and Wildlife, shall adopt principles and
guidelines for diversion and use of water for cannabis cultivation
in areas where cannabis cultivation may have the potential to
substantially affect instream flows. The principles and guidelines
adopted under this section may include, but are not limited to,
instream flow objectives, limits on diversions, and requirements
for screening of diversions and elimination of barriers to fish
passage. The principles and guidelines may include requirements
that apply to groundwater extractions where the board determines
those requirements are reasonably necessary for purposes of this
section.

(B) Prior to adopting principles and guidelines under this
section, the board shall allow for public comment and hearing,
pursuant to Section 13147. The board shall provide an opportunity
for the public to review and comment on the proposal for at least
60 days and shall consider the public comments before adopting
the principles and guidelines.

(2) The board, in consultation with the Department of Fish and
Wildlife, shall adopt principles and guidelines pending the
development of long-term principles and guidelines under
paragraph (1). The principles and guidelines, including the interim
principles and guidelines, shall include measures to protect
springs, wetlands, and aquatic habitats from negative impacts of
cannabis cultivation. The board may update the interim principles
and guidelines as it determines to be reasonably necessary for
purposes of this section.

(3) The Department of Fish and Wildlife, in consultation with
the board, may establish interim requirements to protect fish and
wildlife from the impacts of diversions for cannabis cultivation
pending the adoption of long-term principles and guidelines by
the board under paragraph (1). The requirements may also include
measures to protect springs, wetlands, and aquatic habitats from
negative impacts of cannabis cultivation.

(b) (1) Notwithstanding Section 15300.2 of Title 14 of the
California Code of Regulations, actions of the board and the
Department of Fish and Wildlife under this section shall be deemed
to be within Section 15308 of Title 14 of the California Code of
regulations, provided that those actions do not involve relaxation
of existing streamflow standards.

(2) The board shall adopt principles and guidelines under this
section as part of state policy for water quality control adopted
pursuant to Article 3 (commencing with Section 13140) of Chapter
3 of Division 7.

(3) If the Department of Fish and Wildlife establishes interim
requirements under this section, it shall do so as emergency
regulations in accordance with Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code. The adoption of those interim requirements is an emergency
and shall be considered by the Office of Administrative Law as
necessary for the immediate preservation of the public peace,
health, safety, and general welfare. Notwithstanding Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code, the emergency regulations shall remain
in effect until revised by the Department of Fish and Wildlife,
provided that the emergency regulations shall not apply after
long-term principles and guidelines adopted by the board under
this section take effect for the stream or other body of water where
the diversion is located.

(4) A diversion for cannabis cultivation is subject to both the
interim principles and guidelines and the interim requirements in
the period before final principles and guidelines are adopted by
the board.

(5) The board shall have primary enforcement responsibility
for principles and guidelines adopted under this section, and shall
notify the Department of Food and Agriculture of any enforcement
action taken.

end insert

begin insert

begin insert SEC. 105. end insert   

end insert begin insert

The California Tax Credit Allocation Committee
shall enter into an agreement with the Franchise Tax Board to
pay any costs incurred by the Franchise Tax Board in the
administration of subdivision (o) of Section 12206, subdivision
(q) of Section 17058, and subdivision (r) of Section 23610.5 of the
Revenue and Taxation Code.

end insert

begin insert

begin insert SEC. 106. end insert   

end insert begin insert

No reimbursement is required by this act pursuant
to Section 6 of Article XIII B of the California Constitution for
certain costs that may be incurred by a local agency or school
district because, in that regard, this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

end insert begin insert

However, if the Commission on State Mandates determines that
this act contains other costs mandated by the state, reimbursement
to local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.

end insert

begin insert

begin insert SEC. 107. end insert   

end insert begin insert

This act is a bill providing for appropriations related
to the Budget Bill within the meaning of subdivision (e) of Section
12 of Article IV of the California Constitution, has been identified
as related to the budget in the Budget Bill, and shall take effect
immediately.

end insert

begin delete

SECTION 1.  

It is the intent of the Legislature to enact statutory
changes relating to the 2016 Budget Act.

end delete